Series 7 - General Securities Representative Exam
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A trader just sold 10 Jan 90 calls in ABC corp for 3.00 each.Simultaneously, he bought 5 Jan 95 calls in ABC corp for 1.80 each. What is the debit or credit for the option premium?
$1100 debit
A
$2100 debit
B
$2100 credit
C
$1100 credit
D
Explanations
The trader collected $3000 in premium selling the 10 90 calls for $300 each. Then, he spent $900 buying 5 95 calls for $180 each. The result is a $2100 credit of premium into his account.