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Bubba purchases 100 shares of XYZ at 78 and, on the same day, writes 1 XYZ October 80 call for a premium of 4. If the option expires unexercised, what is Bubba's profit on the 100 shares of stock?
Suggested Answer: D
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cannot be determined. Since Bubba has not yet sold the stock, a profit cannot be determined on the stock. He has a $400 profit on the option.
12 comments · newest first
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Sylvia
12 months ago
Just to clarify, the premium adds to the profit, right?
BL
Blossom
1 year ago
It's definitely $200, can't believe some people doubt it!
LO
Lorita
1 year ago
Wait, how do you get $200? Seems off to me.
PE
Penney
1 year ago
Totally agree, it's straightforward math!
GA
Garry
1 year ago
Profit is $200 if the option expires unexercised.
AL
Alpha
1 year ago
I feel like I need to double-check the calculations. Is it just the premium added to the stock's value, or do I need to consider other factors?
TY
Tyra
1 year ago
I practiced a similar question where the option was exercised, and I think that made it more complicated. This seems straightforward, but I might be missing something.
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Giovanna
1 year ago
I think the profit would be the difference between the purchase price and the selling price, plus the premium, but I'm not entirely sure how to add that up.
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Lawana
1 year ago
I remember that if the option expires unexercised, I just need to calculate the profit from the shares and the premium received.
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Veronika
1 year ago
I've got a good feeling about this one. The real-time display of race positions and lap times seems like a clear functional requirement for an IT system to support the racing club's activities. I'll go with option A.
SE
Selma
1 year ago
Option D with the zfs create import command looks interesting, but I'm not sure if that will fully meet the requirement of keeping the production system active during the migration.
DO
Dorinda
1 year ago
I lean towards 'True' because I believe there's a push for better communication in tech roles now, but I'm not completely confident about it.