Suppose you purchase the May 2017 call option on corn futures with a strike price of $3.90. Assume you purchased the option at the last price of the day. Use Table 23.2

a. How much does your option cost per bushel of corn? 

b. What is the total cost of your position? Assume each contract is for 5,000 bushels. 

c. Suppose the price of corn is $3.77 per bushel at the expiration of the option contract. What is your net profit or loss from this position?

d. What is your net profit or loss if corn futures prices are $4.14 per bushel at expiration? 

Table 23.2:
 

Transcribed Image Text:

a. Option cost per bushel b. Total cost c. Loss d. Profit a. Option cost per bushel b. Total cost c. Loss d. Profit