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10 March, 16:42

The price of a four-month GE call option with an exercise price of $35 is $6. The current price of GE stock is $40 per share. The call holder exercises the call at expiration when the price of GE stock is $43. What is the payoff to the call holder

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  1. 10 March, 17:02
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    Profit on exercise of call option = Price of stock as at expiry - strike price

    =43-35 = 8$

    Net profit = (Profit on exercise of call option-Premium paid) * Contract size

    = (8-6) * 100 = 2*100 = 200$

    Payoff is $200
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Home » Business » The price of a four-month GE call option with an exercise price of $35 is $6. The current price of GE stock is $40 per share. The call holder exercises the call at expiration when the price of GE stock is $43. What is the payoff to the call holder
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