If the stock is trading at 55 in three months what will be, Finance Basics

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If the stock is trading at 55 in three months what will be

Question: You own a call option on Intuit stock with a strike price of $40. The option will expire in exactly three months.

a. If the stock is trading at $55 in three months, what will be the payoff of the call?

b. If the stock is trading at $35 in three months, what will be the payoff of the call?

c. Draw a payoff diagram showing the value of the call at expiration as a function of the stock price at expiration.

Strike Price $40.00

a. If the stock is trading at $55 in three months, what will be the payoff of the call?

Spot price in 3 months $55.00

Exercise value of call

b. If the stock is trading at $35 in three months, what will be the payoff of the call?

Spot price in 3 months $35.00

Exercise value of call

c. Draw a payoff diagram showing the value of the call at expiration as a function of the stock price at expiration.

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