An investor purchases 100 shares of common stock at €50 each and simultaneously sells call options on 100 shares of the stock with a strike price of €55 at a premium of €l per option. At the expiration date of the options, the share price is €58. The investor's profit is closest to:
Because the share price (ST ) is greater than the strike price (×), the investor collects the premium plus the difference between the strike price and purchase price: X- S0+ C0 . In this case,100 x (€55 -€50 +€l ) = €600.