Question

You purchase one IBM July 90 call contract for a premium of $4. The stock has a 2 for 1 split prior to the expiration date. You hold the option until the expiration date when IBM stock sells for $48 per share. You will realize a ______ on the investment. A. $300 profit B. $100 loss C. $400 loss D. $200 profit

Answer 1

$200 profit

Step-by-step explanation:

Call profit

=
`2 {0, [$48 - ($90/2)(100)]} - $400 = $200`