Several Rumors Concerning Nu-Tek Stock Are Causing the Market Price

question 388

Multiple Choice

Several rumors concerning Nu-Tek stock are causing the market price of the stock to be quite volatile. Given this situation, you decide to buy both a one-month European $10 put and a one-month European $10 call on this stock. The call premium is $.35 and the put premium is $1.60. What will your net profit or loss be on these option positions if the stock price is $7 on the day the options expire? Ignore trading costs and taxes.

• A) -$495
• B) -$35
• C) $105
• D) $140
• E) $175

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Definitions:

Sexual Exploitation

The abuse of a position of vulnerability, differential power, or trust for sexual purposes; this includes profiting monetarily, socially, or politically from the sexual exploitation of another.

Planter Class

The wealthy and socially dominant class in the American South before the Civil War, known for owning large plantations and many slaves.

Antebellum Southern Society

The social structure and culture in the American South before the Civil War, characterized by plantation economies and slavery.