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NEW QUESTION: 1
An investor owns 100 shares of General Motors stock. She sells one stock call option. The investor's position is now a covered call with the following characteristics:
Stock position: LONG 100 shares of General Motors Stock purchase price: $62.00 per share Option position: SHORT 1 call option General Motors stock Underlying asset: 100 shares of General Motors
Exercise price: $80.00 per share Premium: $0.13 per share Expiration date: October
If the expiration-day price of General Motors stock were $82.00 per share, then the expiration-day profit/loss for the covered call would be:
A. + $20.00 - $0.00 - $0.13 = $19.87
B. + $20.00 -$2.00 + $0.13 = $18.13
C. + $20.00 - $0.00 + $0.13 = $20.13
Answer: B
Explanation:
(ST - St) - MAX(0, ST - X) + Ct = (82.00 - 62.00) - MAX (0, 82.00 - 80.00) + .13= 20.00 - MAX
(0, 2.00) + .13 = 20.00 - 2.00 + .13 =

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C. Allows offenses to merge both events & flows into the same offense
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