Refer to Table 23.2 in the text to answer this question. Suppose you purchase the June 2014

Question:

Refer to Table 23.2 in the text to answer this question. Suppose you purchase the June 2014 call option on com futures with a strike price of $5.05. Assume you purchased the future at the last price. How much does your option cost per bushel of com? What is the total cost? Suppose the price of com futures is $4.96 per bushel at expiration of the option contract. What is your net profit or loss from this position? What if com futures prices are $5.24 per bushel at expiration?

Table 23.2

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.