Grant purchased one call on XYZ stock at an exercise price of $25. The market price of XYZ stock when Grant purchased the call was $24 a share. XYZ is currently priced at $30 a share. Grant paid $120 to buy the call. How much profit will Grant make if he exercises the option today and then sells the shares? Ignore all transaction-related costs.
A call option gives the owner the right to buy at the exercise price. Each ...
The solution explains how to calculate the profit that would be made on the exercise of the option.