Howard has sold a european call option with strike of $181 on MCD for $33.81. What...

Question

Question

Howard has sold a european call option with strike of $181 on MCD for $33.81. What is his profit at expiration, if MCD's price turns out to be $162?

Answer 1

Answer #1

Since, Howard has sold a European call option, he will profit of the price of MCD will fall and the call will expire worthless.

So, as the Strike price is $181 , and the price of MCD falls to $162. He will profit , as he will earn the premium paid by the buyer which is $33.81.

Profit at expiration is = $33.81

Answer 2

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