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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Basics of Derivatives

An investor buys a call option on a stock with a strike price of ₹1,200 at a premium of ₹45. At expiry the stock settles at ₹1,230. What is the investor's net profit per share?

The investor has a net loss of ₹15 per share. The call is worth ₹30 at expiry (1230 minus 1200), but the premium paid was ₹45, so the net outcome is 30 minus 45, which is minus ₹15.

  1. A-₹15Correct
  2. B₹30
  3. C₹15
  4. D-₹45

Explanation

Payoff at expiry = max(1230-1200, 0) = 30. Net = 30 - 45 premium = -15, a net loss. ₹30 ignores the premium, ₹15 has the wrong sign, and -₹45 assumes the option expired worthless although it is in the money.

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