Question

What's the profit at maturity of a long call bought at 10 that has a strike 100, if the underlying asset price is 120 ?

Group of answer choices
A.) 20
B.) 10
C.) 0
D.)-10

Answer 1

The profit at maturity of the long call would be $10. Therefore, the correct option is B.

Step-by-step explanation:

The profit at maturity of a long call bought at $10 with a strike price of $100, when the underlying asset price is $120, can be calculated as follows:

Profit = Maximum (0, Asset price at maturity - Strike price) - Premium paid

Profit = Maximum (0, $120 - $100) - $10 = $20 - $10 = $10

Therefore, the profit at maturity of the long call would be $10.