You own a stock bought at 55 for a $3 premium. What is your maximum profit per share (in dollars)?

The answer is 8. Approach: Your upside on the stock is capped at the strike.

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Covered Call Max Profit

Morgan StanleyIMC Trading

You own a stock bought at $50 and sell a call struck at$ 55 for a $3 premium. What is your maximum profit per share (in dollars)?

Approach

Your upside on the stock is capped at the strike.

Add the premium you collected.

Answer

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The answer is 8. Sign in free for the full worked solution and to check your own answer.