Final answer:
The question is about calculating profit or loss for different expiration prices of Texas Instruments stock in an options trading scenario. The profit or loss varies based on the outcome of the bought and written call options at the given prices. The correct option answer will depend on the stock price at expiration.
Step-by-step explanation:
The question involves a scenario of options trading, specifically with purchasing and writing call option contracts for Texas Instruments stock with different strike prices. Calculating the profit or loss for each stock price scenario given involves understanding the outcome of these options at expiration.
Profit/Loss Calculations:
At $70, both options expire worthless. The loss is the net premium paid: $7.50 paid - $6 received = $1.50 loss per share or $150 for the full contract, as each contract represents 100 shares.
At $75, the purchased $75 call option is at the money, and the written $80 call option expires worthless. The loss remains the same, $150.
At $80, the purchased $75 call has an intrinsic value of $5. After accounting for the premium paid and received, the net profit is ($5 - $1.50) * 100 shares = $350.
At $85, the purchased $75 call has an intrinsic value of $10, and the written $80 call has an intrinsic value of $5. The net profit after premiums is ($10 - $5 - $1.50) * 100 shares = $350.
So, we can summarize that the profit or loss will depend on the stock's price at expiration relative to the strike prices and premiums of the options involved. Always remember to mention the correct option answer in the final answer, which in this scenario varies based on the stock's expiration price.