Quick question:
Person A buys Qty 10 June 15 Calls for Stock X @ $15 for $100
Stock X closes at $13 on June 15.
Question:
Person A looses $100 or does he have to pay (15-13)*1000 ?
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Correct answer is the former, not the latter.
So Person A looses the $100 premium for the OTM option?
Basically the $15 call option means that they have the option to buy the stock for $15. Since anyone can buy it at $13 that means he won't exercise it (or he'd have to be an idiot to exercise it) so he just lets them expire.
Not necessarily, it could be physically settled and person A might need the underlying for other purposes. But yes, normally he would just lose the 100.
What are you talking about? Stock X can be physically settled?
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