Series 7 - General Securities Representative Exam
An investor owns 400 shares of ABC stock at an average price of $44.65. He sold 4 January 50 Calls for 2.30 each. At expiration, ABC stock was trading at $48.65. How much did the investor gain or lose from the options portion of the position?
The investor wrote 4 covered calls. The stock was trading below the strike price of the calls at expiration - so the investor keeps the premium that he collected and also keeps his stock. The collected $920. It is a $920 gain for the options portion of the position