Question

Given the information below:

			Calls		Puts
Option and NY Close	Expiration	Strike Price	Volume	Last	Volume	Last
XYZ
	February	$112	85	7.55	40	0.60
	March	$112	61	8.55	22	1.55
	May	$112	22	10	11	2.85
	August	$112	3	12.5	3	4.70

The current stock price is $114.00 and the stock price on the expiration date is $120.00. How much is your options investment worth? (ignore commissions).

A) $80.00

B) $6,000.00

C) $8,000.00

Answer 1

Calculate the option investment worth as follows:

Investment worth = Number of contracts * Contract size * (Expiration price - Strike price)

Investment worth = 10*100*($120 - $112)

Investment worth = 1000*$8

Investment worth = $8,000

Note:

Number of contracts assumed as 10.

Contract size assumed as 100.