### Calculate your net profit on the option

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##### Reference no: EM131057807

You have purchased a call option (100 contracts) on Mercer Corporation common stock. The option has an exercise price of \$20.00 and Mercer’s stock currently trades at \$20.00. The call premium (price) is \$2 per contract. (a) Calculate your net profit on the option if Mercer Corporation’s stock price rises to \$23.50 and you exercise the option. (b) Calculate your net profit on the option if Mercer Corporation’s stock price does not change over the life of the option.

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