The price of a stock on July 1 is $57 . A trader buys 100 call options on the stock with a strike price of $60 when the option price is $2 . The options are exercised when the stock price is $65 . The trader's net profit is

A. $700
B. $500
C. $300
D. $600

C
The payoff from the options is 100×(65-60) or $500 . The cost of the options is 2×100 or $200 . The net profit is therefore 500−200 or $300.