Canadian Securities Course (CSC) Practice Exam · Question
An investor buys a call option with a strike price of $50 for a premium of $3. On the expiration date, the underlying stock trades at $55. What is the investor's profit or loss per share?
The call option provides the right to buy at $50. If exercised at $55, the intrinsic value is $5. After deducting the $3 premium paid, the net profit is $2 per
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Question: An investor buys a call option with a strike price of $50 for a premium of $3. On the expiration date, the underlying stock trades at $55. What is the investor's profit or loss per share?
Answer options: ✅ A profit of $2
- A profit of $5
- A loss of $3
- A profit of $7
Correct answer: A profit of $2
Explanation: The call option provides the right to buy at $50. If exercised at $55, the intrinsic value is $5. After deducting the $3 premium paid, the net profit is $2 per share.
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