If an investor's call option is exercised at a strike price of $85, what is included in the proceeds of the sale?

When a call option is exercised, the investor has the right to purchase the underlying asset (usually stock) at the agreed strike price. In this context, if the option is exercised at a strike price of $85, the proper determination of the proceeds from the sale includes not only the strike price but also the initial premium received.

The proceeds calculation involves taking into account both the amount paid to acquire the stock through the exercise of the option (the strike price) and any premium that was collected when selling the options initially. The premium is a payment received by the options seller and serves as a form of compensation, contributing to the overall profitability of the transaction. Therefore, for someone who has sold the call option and is calculating their total proceeds upon its exercise, the strike price plus the initial premium creates a full picture of the financial outcome.

This inclusion of both elements is essential to understanding the complete financial impact of exercising the option, as it determines the net profit or loss related to that transaction. The other choices, while they indicate various aspects of options trading, do not provide a full representation of the proceeds as they omit one of the critical components (the premium).