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Option exercised - Profit made

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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.

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Solution Summary

The solution explains how to calculate the profit that would be made on the exercise of the option.

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A call option gives the owner the right to buy at the exercise price. Each ...

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