solution

The below figure shows the profits to be made when buying a call option. If the spot (market) price of the JPM stock is $37 at the expiration date of the call with exercise price of 38, would the call option be exercised and what will be the loss/gain of the option holder?

a the call will be exercised and the holder will make $4 gain

b the call will not be exercised and the holder will not lose anything

c the call will be exercised and the holder will lose and cost of the call option

d the call will not be exercised and the holder will lose and cost of the call option

e none of the above

 
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