The Market Price of Simpson Structures Stock Has Been Relatively

Multiple Choice

The market price of Simpson Structures stock has been relatively volatile and you think this volatility will continue for a couple more months. Thus, you decide to purchase a two-month European call option on this stock with a strike price of $32.50 and an option price of $1.80. You also purchase a two-month European put option on the stock with a strike price of $32.50 and an option price of $.60. What will your net profit or loss on these option positions be if the stock price is $34.20 on the day the options expire? Ignore trading costs and taxes.

A) -$130
B) -$120
C) -$70
D) -$60
E) $10