Chapter 02 · Section 2.1

Profile at expiration

• Nick is the writer of the IBM 104 call for which he receives $4.00.
• He has an unlimited loss potential and a limited profit potential.
• Thebreak even point of the call (ie. where the investor neither gains or loses) is at $108.
• If the price of the underlying does not increase more than the strike price. Nick would keep the premium he recieved from the buyer as his profits. 4 x 100 = $ 400.