Calls ITM

What this in-the-money call profit question tests

This is an easy options theory question that checks whether a candidate can calculate realised profit on a long call position at expiration. It is a foundation-level check that appears across quant trading and derivatives interview rounds.

The core skill is decomposing the profit calculation into two steps: first, determining the intrinsic value of the option at expiration given the stock price; second, subtracting the original premium paid. Candidates must avoid common mistakes such as confusing the stock price move with the option profit, or forgetting to account for the cost of entry.

• Intrinsic value of a call at expiration
• Relationship between strike price and stock price
• Premium paid as the cost basis