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Profit on call option

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

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March 19, 2017 at 11:12 pm #378745
syfar42
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When a profit is made on call option (Underlying greater than exercise price), the person doesn’t exactly receive any cash right? Its just a right to purchase at a lower price
March 20, 2017 at 7:56 am #378766
John Moffat
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They will receive cash. The reason is that if they are using the options to hedge then if they exercise them then they will buy at the exercise price and then immediately sell at the actual price – the net amount is the cash they will receive.
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