Rosa purchased three call option contracts on ABC stock with a strike price of $27 when the option premium was quoted at $1.1. The option expires today when ABC stock price is $29 at the market. She pays $10 as trading costs in total. What is the net profit on this investment?

Profit on a long call option = max (St - X, 0) - premium paid

Profit on a long call option = max (29 - 27, 0) - 1.1

Profit on a long call option = max (2, 0) - 1.1

Profit on a long call option = 2 - 1.1

Profit on a long call option = 0.9 per share

Total profit on the long call option = 0.9 * 100 shares per contract * 3 contracts = 0.9 * 100 * 3 = $270

Net profit on this investment = 270 - 10

Net profit on this investment = $260