Chapter 02 · Section 2.1
Profit or loss on a per share basis
Shawn is the holder of a call option, i.e. he is long a call option. It is a Ford Dec 30 call and the premium he paid was $ 2 per share. At expiration in December Ford shares trade at $ 30. What is the profit or loss on a per share basis?
a) 2
b) 0
c) 200
d) -200
e) -2
f) -20
The option cost $ 2 per share.
The profit an option holder can make on the option itself at expiration is the difference between the exercise price and the price of the underlying asset at expiration.