Alcan stock recently closed at $52 51 Assume that you write a covered call on Alcan by writing one September call with a strike price of $55, and buying 100 shares of stock at the market price The option premium that you obtain from writing the call is $370 Assume the stock will pay no dividends be...

a The stock price is currently at 5251 There is no gain on the shares but thankfu ...

Alcan stock recently closed at $52.51. Assume that you write a covered call on Alcan by writing

Question:

Alcan stock recently closed at $52.51. Assume that you write a covered call on Alcan by writing one September call with a of $55, and buying 100 shares of stock at the market price. The option premium that you obtain from writing the call is $370. Assume the stock will pay no dividends between now and the expiration date of the option.
a. What is the total profit if the stock price remains unchanged?
b. What is the total profit if the stock price goes up to $55?
c. What is the total loss if the stock price goes down to $49?
Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.