NISM Certifications · NISM-Series-VIII: Equity Derivatives · Trading Mechanism
A client buys one lot (lot size 100) of a stock call option with strike Rs 500 at a premium of Rs 12, and the option is exercised at expiry when the settlement price is Rs 530. What is the client's net profit per lot, ignoring charges?
The net profit is Rs 1,800. The call is worth 30 rupees per share at expiry (530 minus 500), the premium paid was 12, so the gain is 18 per share, which is Rs 1,800 on a lot of 100.
- ARs 1,800Correct
- BRs 3,000
- CRs 4,200
- DRs 1,200
Explanation
Intrinsic value at expiry = 530 - 500 = 30. Net per share = 30 - 12 = 18. For 100 shares, profit = 1,800. Rs 3,000 ignores the premium paid.
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