An investor with no other positions buys 1 dwq jun 60 call at 3.50. if the investor exercises the call when the stock is trading at 68 and immediately sells the stock in the market, what is the investor's profit or loss?
a.$450 profit.
b.$350 profit.
c.$450 loss.
d.$350 loss.
Answer: $450 profit The investor exercised the right to buy the stock for 60 and can sell the stock in the market for 68 for an $8 per-share gain. The gain of 8 minus the premium of 3.50 gives the investor a profit of 4.50 (4.50 Ă— 100 = $450).
