What is net gain or loss after accounting for premium paid

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Reference no: EM13807318

A call option on an S&P 500 futures contract has an exercise price of 1490; the call premium is currently $6.50. On the same date, a put option on the S&P 500 futures contract has an exercise price of 1490; the put premium is currently $7.50. The two options have the same expiration date.

Assume that the S&P 500 index is 1485 at expiration:

A) Should the call option be exercised or should it be left to expire? What is the net ($) gain or loss after accounting for the premium paid to purchase the option?

B) Should the put option be exercised or should it be left to expire? What is the net ($) gain or loss after accounting for the premium paid to purchase the option?

Reference no: EM13807318

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