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Long Call Profit

Derivatives & Risk

Option Payoffs

Easy

A long European call has strike

100

and premium

5

. The underlying expires at

112

. What is the net profit per share?

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Hint 1

Payoff is $max (S - K, 0)$ .

Hint 2

Subtract the premium.

Show worked solution

1. Compute
$(112 - 100) - 5 = 7$
2. Key idea
Profit = payoff - premium.

Answer: 7

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