Consider a call option with a premium of $8 for which the exercise price is $50....

Consider a call option with a premium of $8 for which the exercise price is $50. What is the profit for a holder if the underlying stock price at expiration is $60.00? What is the profit for the seller?

Expert Solution

Dear student...Thank you for using chegg...Answer is

Since the price at expiration is 60, thereffore buyer will exercose his right and purchase the securite from seller at$50 and then sell the same in market at $60

Profit for holder = 60 - 50 - 8 = 2

Loss for the seller =profit of the holder = (2)

jeff jeffy answered 2 years ago

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