Grant Purchased One Call on XYZ Stock at an Exercise

Multiple Choice

Grant purchased one call on XYZ stock at an exercise price of $25. The market price of XYZ stock when Grant purchased the call was $24 a share. XYZ is currently priced at $30 a share. Grant paid $120 to buy the call. How much profit will Grant make if he exercises the option today and then sells the shares? Ignore all transaction-related costs.

A) $380
B) $480
C) $500
D) $600