Question
Use the following information for questions 9 and 10 below. You may assume (for simplicity) that both put and call option contracts for gold are
Use the following information for questions 9 and 10 below. You may assume (for simplicity) that both put and call option contracts for gold are for a quantity of one ounce of gold. Both the put and call options have the same maturity. The premium for the call is $2/ounce and the premium for the put is $1/ounce. Both options have a strike price of $1100/ounce. An investor buys one call option contract. If the price of gold in the spot market at the maturity date of the option is $1104, what is her profit/loss?
A profit of $4.
A profit of $2.
A loss of $4.
A loss of $6.
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