You are observing the current volatility in the market and looking for a trade. Specifically, you are studying Microsoft calls and puts contracts. As a result, you are planning to buy one MSFT call with an exercise price of $70 which will cost you $3. At the same time, you also intend to sell one MSFT call with an exercise price of 75 which costs $1. (don’t forget to multiply by 100)
The expiration date has come and MSFT is trading at $74. How much is your profit at this price?
Group of answer choices
A. $100
B. $200.
C. 300
D. zero.
E. None of these is correct.