
Explanation:
The correct answer is A (-$5).
Explanation: The value of the call option to the call seller at expiration is determined by the payoff formula for the seller, which is:
Where:
$30).$25).Substituting the values:
Thus, the call seller's payoff is -$5, which matches option A. Options B and C are incorrect because they either ignore the payoff formula or incorrectly incorporate the option premium into the calculation of the call seller's value at expiration.
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An investor gathers the following information about a call option:
$5$25$15
At expiration, if the price of the underlying is $30, the value of the call option to the call seller is:A
-$5
B
$0
C
$10
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