1. Katie purchased 4 call options on Atlas Co. stock with a strike price of $37.50.

On the expiration
date, the stock was priced at $36.95 a share. What is the payoff on the 4 options contracts
(ignoring the premium)?

A. -$220
B. -$55
C. $0 (Answer)
D. $2.50
E. $55

2. Suppose you purchase one Texas Instruments August 75 call contract quotes at $8.50 and write
one Texas Instruments August 80 call contract quoted at $6. If, at expiration, the price of a share
of Texas Instruments stock is $79, your profit would be __________?

A. $150 (Answer)
B. $400
C. $600
D. $1,850

Work:

$79-$75 = $4.

$4-$8.50 = -$4.50.

-$4.50 + $6 = $1.50

$1.50 * 100 = 150

3. You purchased 6 call options with $40 strike price at a total cost of $150. On the expiration date,
the underlying stock was priced at $39.20. What is the percentage return on your investment?
A. 420%
B. -100% (Answer)
C. 68.75%
D. 2.02%
E. 220%

4. Jennifer purchased 5 put options contracts on Winslow Mfg. stock. The option premium was
$.20 and the strike price was $17.50. On the expiration date, the stock was selling for $17.80 a
share. What is the total payoff on the 5 options contracts?
A. $-100
B. -$50
C. $0 (Answer)
D. $50
E. $150
5. You purchased a put with a strike price of $35 and an option premium of $.65. You
simultaneously bought the stock at a price of $34 a share. What is your profit per share on these
transactions if the stock price at expiration is $33.50?

A. -$1.15
B. -$0.15
C. $0.35 (Answer)
D. $.50