Calculation Of Spot Price For Crude Oil And Payoff For The Option

Question

You own a 3-month call option on crude oil. The strike price of the option is X = \$50/bbl. (Note: bbl = barrel). Suppose the spot price of crude in 3 months is \$49/bbl. What will be the payoff to your option? Suppose instead the spot price in 3 months is \$51/bbl. What will be the payoff to your option?

Summary

The question belongs to Finance and it discusses about calculation of spot price for crude oil in 3months of time and the payoff for such option.

Total Word Count 84

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