A customer sells 1 ABC Feb 40 Call @ $7 when the market price of ABC is $39. The stock moves to $50 and the customer is assigned. The stock is bought in the market for delivery. The gain or loss to the writer is:
A. $300 gain
B. $300 loss
C. $700 loss
D. $1,100 loss

The seller of the call must sell the stock at $40. Since the seller received $7 per stock in order to write the call, his total revenue = $40 + $7 = $47 per stock. Since the stock's price is $50, the seller of the call will lose $3 per stock (= $50 - $47).

Since every call option includes 100 stocks, the total loss = $3 per stock x 100 stocks = $300 loss

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A customer sells 1 ABC Feb 40 Call @ $7 when the market price of ABC is $39. The stock moves to $50 and the customer is assigned. The stock is bought in the market for delivery. The gain or loss to the writer is: A. $300 gain B. $300 loss C. $700 loss D. $1,100 loss

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A customer sells 1 ABC Feb 40 Call @ $7 when the market price of ABC is $39. The stock moves to $50 and the customer is assigned. The stock is bought in the market for delivery. The gain or loss to the writer is:
A. $300 gain
B. $300 loss
C. $700 loss
D. $1,100 loss