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?

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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 1 year ago

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