Consider a long call option with a strike price of $50 and a premium of $3.50. If the underlying asset's price at expiration is $58, what is the net profit/loss for the option holder?

Question: Consider a long call option with a strike price of $50 and a premium of $3.50. If the underlying asset's price at expiration is $58, what is the net profit/loss for the option holder?

Answer options: ✅ $4.50 profit

• $6.50 profit
• $8.00 profit
• $8.00 loss

Correct answer: $4.50 profit

Explanation: The intrinsic value at expiration is $58 - $50 = $8.00. Subtracting the premium paid, $8.00 - $3.50 = $4.50 profit.