ZYX is above $55 at expiration
The ZYX 50 put option will expire out-of-the-money and worthless. The investor will be assigned on the ZYX 55 call and is obligated to sell his 100 ZYX shares at the call's strike price of $55. The result after expiration: no position in either ZYX stock or options. However, he has received and keeps two option premiums for having sold both a put and a call.
The investor originally purchased 100 ZYX for $52 per share, for a total investment of $5,200. After assignment, the total received from selling these 100 shares at a net price of $60.25 per share is $6,025. The net stock profit is therefore: $6,025 received - $5,200 paid = $825. This profit represents a return on the original $5,200 investment in 100 ZYX shares of approximately 15.8% over three months.
However, when establishing this position the investor also deposited cash, securing the short put, for a possible purchase of an additional 100 shares if assigned on the downside. Since the put's strike price is $50, a total of $5,000 ($50 strike price x 100 shares) was deposited. This brings the total assets committed up front to: $5,200 for 100 ZYX shares + $5,000 cash deposited = $10,200. Given this, the $825 profit from assignment on the call represents a return on total assets committed of approximately 8.1% for three months.
Keep in mind that no matter how high ZYX rises above $55 by expiration, the investor has the obligation to sell ZYX at the call strike of $55 if assigned. However, he has taken in both the put and the call premium to offset some of the upside potential that might be missed.