Question

"The Standard and Poor's 100 Index has closed at 575.12, up 2 points from the prior day's close. The holder of 5 "deep in the money" OEX Call contracts would have an approximate gain of:"

Answer 1

$1,000

Step-by-step explanation:

Multiplier = 100,

Points = 2

Number of contracts = 5

Then solving for the approximate gain;

We have the Index option contracts that have a multiplier of 100.

Therefore, a change of 2 points equals 100 x 2 = $200.00 per contract.

In that wise, this person is told to have 5 contracts, which then translates to the change in value, which is 5 x $200 = $1,000

Hence, the right answer is $1,000.