Question

You own 1000 shares of MMM that you bought for $153. You also have written 10 call option contracts on MMM, at a premium of $1.1 and with a strike price of $156, maturing in 2 months. If at maturity of the option, the stock price is $169, what is your net profit on this position?

Answer 1

at the maturity stock price is 169 therefore we can excise the option which gives a profit of 169-156 = 13$ less premium paid on option $1.1 net profit on position is 13-1.1 = $11.9 per contract (Assuming one share per contract if one contract has 10 share then net profit will be $119)