An investor buys 100 shares of ABC at $50 per share and also sells 1 ABC April 45 call for 8. In the event that the investor is assigned an exercise notice and ABC is at 60, the trader's gain or loss on a per share basis would be:

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Business

Cynthia Hendricks

16 May, 06:28

An investor buys 100 shares of ABC at $50 per share and also sells 1 ABC April 45 call for 8. In the event that the investor is assigned an exercise notice and ABC is at 60, the trader's gain or loss on a per share basis would be:

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Vaughn Wilkinson · Answer 1

The investor earned $3 per share or $300 in total.

Explanation:

Investor's basis per share = $50 (purchase price)

Investor received $8 per share for selling the call option, and then he sold the stocks ate $45 per share.

investor's gain/loss = total revenue per share - cost basis = ($8 + $45) - $50 = $53 - $50 = $3 per share

since the investor purchased 100, shares, total profit = 100 x $3 = $300