# Between Strike and Break-Even

## OEX Index is between 605 and 619 at expiration

### Buy 1 OEX 605 Call at \$14

With the OEX exercise settlement value exactly at the strike price of \$605 at expiration, the 605 call would be at-the-money and have no value.
With OEX at the break-even point of 619 at expiration, the 605 call would be in-the-money and exercised.

The cash settlement amount received upon exercise would be:

619 (settlement value) – \$605 (call strike price) = \$14 x \$100 = \$1,400

On the other hand, if the call were sold for its intrinsic value of \$14 (619 OEX level – 605 call strike price) at this point, the premium received would be:

\$14 x \$100 multiplier = \$1,400

This amount of \$1,400 is the total cost of the call.

If the OEX exercise settlement value is between 605 and 619 at expiration, the 605 call will also be in-the-money and would be exercised. The cash settlement amount received, however, would be less than the total cost of the call, resulting in a partial loss for the position.

For example, say the exercise settlement value is 610 at expiration. The cash settlement amount received upon exercise would be:

610 (settlement value) – \$605 (call strike price) = \$5 x \$100 = \$500

If the call were sold for its intrinsic value of \$5 (610 OEX level – 605 call strike price) at this point, the premium received would be:

\$5 x \$100 multiplier = \$500

OEX did rise in value, but not as much as anticipated. The call that originally cost a total of \$1,400 is now worth \$500, so the investor can recoup some of its initial purchase price and realize a partial loss.

\$1,400 total premium paid for call
\$500 cash settlement amount received at call’s exercise (or sale at intrinsic value)
\$900 partial loss

However, the call buyer could have earned interest on the \$58,600 not originally committed to this bullish position, which could offset some of the option loss.

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