Assume You Purchase One Share of a Stock and Sell

Multiple Choice

Assume you purchase one share of a stock and sell a call option on a single share of that same stock with an exercise price of $25.What is the maximum payoff you can realize on this combination?

A) The exercise price of $25
B) An amount equal to the stock price on the option expiration date
C) An amount equal to $25 minus the stock price on the option expiration date
D) An amount equal to the stock price on the expiration date plus $25
E) Zero