A more detail example.

If there are two persons: A and B, A wants to buy a stock; B wants to buy an
option of this stock and the strike price of it is 90$.Now they both have
100$. Suppose the stock price now is 100$.

So A use his 100$ buy a stock, and B use a little money C <100$ buy an
option and save other money into bank.

One year later, the stock price is 110$, so the profit of A is [110-100]$
and B took his money out from the bank 90$ to buy the stock and his profit
from this trade is [110-(90+C)]$, but he still got another profit from the
bank interests during the time because he saved the money in it. So his
total profit is [110+r-(90+C)]$.


2009/5/12 BearXu <bearxu83@gmail.com>

> If the strike price of an call option is 30$, so finally the stock price is
> 40$Is the payoff of the option 10$?
> I doubt it.
>
> The guy who bought the stock or the call option would both bear the same
> risk of the stock, but if the guy bought the option at first,  he would get
>  some extra money (the interests of the stock price now minus the price of
> the option).
>
> So the payoff of a call option maybe is max[St-K+r, r] instead of max[St-K,
> 0]
>
> where St is the final price of the stock, K is the strike price, r is
> the the interests of the stock price now minus the price of the option
>

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