Question

Chris purchased a call option on Nov 18 th 2016 for $500. The Option gave him the right to buy 100 shares of Vectron stocks for $45 per share. He sold option for $550 on Dec 15 th 2017 when the price of the stock was $48 a share. How much capital gain should report on his 2017 return?

A-$0

B-$50

C-$200

?D-$300

Answer 1

correct answer is B $50

Step-by-step explanation:

given data

purchase = $500

right to buy = 100 shares

stocks = $45 per share

sold = $550

price of stock = $48

solution

As we know that capital gain should be reported as difference between the buy and sell price so

here capital gain = sold price - purchase price ............1

put here value

capital gain = $550 - $500

capital gain = $50

so correct answer is B $50