The Market Price of Simpson Structures Stock Has Been Relatively

question 72

Multiple Choice

The market price of Simpson Structures stock has been relatively volatile and you think this volatility will continue for a couple more months. Thus, you decide to purchase a two-month European call option on this stock with a strike price of $32.50 and an option price of $1.80. You also purchase a two-month European put option on the stock with a strike price of $32.50 and an option price of $.60. What will your net profit or loss on these option positions be if the stock price is $34.20 on the day the options expire? Ignore trading costs and taxes.

• A) -$130
• B) -$120
• C) -$70
• D) -$60
• E) $10

---

Definitions:

Mass Consumption

A pattern of economic growth where a large portion of the population engages in the purchase and consumption of goods and services in significant quantities.

Henry Ford

Henry Ford was an American industrialist and founder of the Ford Motor Company, known for revolutionizing the automobile industry with the introduction of assembly line manufacturing techniques.

19th Century

The period from January 1, 1801, to December 31, 1900, characterized by significant industrial, cultural, and political changes globally.

Labor

The effort by humans to produce goods or services in the economy.