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Futures and options

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A trader buys 100 European call options with a strike of $20 and a time to maturity of one year. The cost of each option is $2. The price of the underlying asset proves to be $25 in one year. What is the trader's gain or loss?

A trader sells 100 European put options with a strike of $50 and a time to maturity of six month. The price received for each option is $4. The price of the underlying asset is $41 in six month. What is the trader's gain or loss?

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Solution Summary

This posting calculates a trader's gain or loss on buying/selling call/put options.

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Question : A trader buys 100 European call options with a strike of $20 and a time to maturity of one year. The cost of each option is $2. The price of the underlying asset proves to be $25 in one year. What is the ...

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