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NISM Certifications · NISM-Series-VIII: Equity Derivatives · Introduction to Options

An investor buys one Nifty call option with strike 22,000 at a premium of Rs 150. The lot size is 50. At expiry Nifty settles at 22,260. What is the investor's net profit on the position?

The net profit is Rs 5,500. The call is worth 260 points at expiry, the premium paid was 150 points, leaving 110 points, and multiplying by the lot size of 50 gives Rs 5,500.

  1. ARs 5,500Correct
  2. BRs 13,000
  3. CRs 7,500
  4. DRs 20,500

Explanation

Intrinsic value at expiry = 22,260 - 22,000 = 260 points. Net per unit = 260 - 150 = 110 points. Multiply by lot size 50 = Rs 5,500. Rs 13,000 ignores the premium; Rs 7,500 is just the premium paid in total, not the profit.

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