Series 7 practice questionmediumOptions — Call Options Calculation
An investor buys 1 XYZ Oct 60 call at $4. At expiration, XYZ stock is trading at $68. What is the investor's profit?
- A$400✓ Correct answer
- B$800
- C$200
- D$1,200
Explanation
Why A — $400
The call buyer exercises at $60 and can sell at $68 for an $8 gain per share. Subtract the $4 premium paid: $8 - $4 = $4 per share. One contract equals 100 shares, so the profit is $4 x 100 = $400. The breakeven point was $64 ($60 strike + $4 premium).
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 755+ Series 7 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Investment Information & Recommendations questions
- An investor buys 1 ABC Jan 45 call at $3. At expiration, ABC is trading at $43. What is the investor's gain or loss?
- An investor who owns stock and buys a put option on that stock has established which strategy?
- An investor buys 1 DEF Apr 70 call at $5. What is the breakeven point?
- Who is ultimately responsible for approving a customer's options account?