Answer: $1.10.

## Explanation For a call option seller (writer), the profit calculation is: **Profit = Option Premium Received - Max(0, Spot Price at Expiration - Strike Price)** Given: - Spot price at expiration = $9.35 - Strike price = $9.40 - Option premium received = $1.15 **Step 1: Determine if the option is exercised** Since the spot price at expiration ($9.35) is **below** the strike price ($9.40), the call option is **out-of-the-money** and will **not be exercised**. **Step 2: Calculate the call seller's profit** When the option is not exercised: - The seller keeps the entire premium received - No obligation to sell the underlying asset Profit = Option Premium Received - Max(0, Spot Price - Strike Price) Profit = $1.15 - Max(0, $9.35 - $9.40) Profit = $1.15 - Max(0, -$0.05) Profit = $1.15 - $0 Profit = **$1.15** Wait, let me re-examine the options. The calculation shows $1.15, but option C is $1.15. However, looking at the question more carefully: Actually, the profit to the call seller should be $1.15, which matches option C. But let me double-check the logic: **Call seller's perspective:** - Receives premium upfront: +$1.15 - If option expires worthless (spot < strike), keeps entire premium - Profit = $1.15 However, the question asks for profit at expiration when spot price is $9.35. The option is out-of-the-money, so the seller's profit is indeed the premium received: $1.15. But wait, looking at the options: A. $0 B. $1.10 C. $1.15 My calculation gives $1.15, which is option C. However, I need to consider if there's any transaction cost or other factor. Let me re-read the question carefully. The spot price of the underlying is given as $10.50 initially, but at expiration it's $9.35. The strike is $9.40. Since $9.35 < $9.40, the option expires worthless. **Correct calculation:** Call seller profit = Premium received = $1.15 Therefore, the correct answer should be **C. $1.15**. **Why not $1.10?** $1.10 would be incorrect because there's no reason to subtract anything when the option expires out-of-the-money. The seller keeps the entire premium. **Why not $0?** $0 would only be if the premium was exactly offset by losses, which doesn't happen here. **Final Answer: C. $1.15**

Author: LeetQuiz .