What is the total premium you receive by selling this call

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Question - You are currently holding 100 shares of Apple stock, which you purchased at $135. You decided to sell a covered call on your entire Apple stock holding at strike $140 for expiry 17 June 2022. (Note: 1 contract is equal to 100 shares)

a) How many contracts do you sell to cover your existing position?

b) What is the total premium you receive by selling this call?

c) What is your new breakeven cost of holding these shares (after you incorporate the premium received from the covered call)?

d) If at maturity, the stock is trading at 135, does the option get exercised or does it expire worthless?

Reference no: EM132989266

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