Question

Rio Tinto purchased a speculative Call on Packard-Bell common stock on March 12, 2012, for $73. The Call is on 100 shares at a strike price of $51. It expires on July 31, 2012. The following data is available with respect to the Call:
Date	Market Price of Packard-Bell Shares	Time Value of Packard-Bell Option
March 31, 2012	46	63
June 30, 2012	48	16
July 13, 2012	48	9
What is the amount of the net gain or loss recorded on the income statement for all periods as of July 13, 2012 on the Call? Enter your response as an absolute number. *Please show steps*

Answer 1

Calculation of Net gain or losses for various periods Premium paid for Call for strike price @ 51/- No. of Shares Total cost (73 x100) 73 100 $7,300 et to Net Margin an Value of Call (63 x 100) Total cost Unrealized loss as on March 31,2012$ 6,300 7,300 (1,000) 30-Iun-12 Value of Call (16 x 100) Total cost after Netting unrealized loss Unrealized loss as on June 30, 2012 1,600 6,300 (4,700) 13-ul-12 Value of Call (9 x100) Total cost after Netting unrealized loss Unrealized loss as on July 12,2012 900 1,600 $(700) Threfore as on July 12,2012 loss of 700 will be booked