Question

In April, a customer buys 1 MCS Oct 50 call for 9 and sells 1 MCS Jul 50 call for 4. What will the customer's profit or loss be if he buys back the July call for $1 and sells the October call for $12?

Answer 1

Answer:

The net gain or profit is $600

Step-by-step explanation:

Firstly, we should know the losses of the customer which were:

9 when the customer bought 1 MCS Oct 50

1 when the customer bought back 1 MCS Jul 50

Therefore the total losses were 10.

And the gains were:

4 when the customer sold 1 MCS Jul 50

12 when the customer sold 1 MCS Oct 50

Therefore the total gains were 16.

Therefore (16 - 10)×100 = $600

Therefore the net gain or profit is $600