The Value of a Futures Option Is Defined as

question 41

Multiple Choice

The value of a futures option is defined as

• A) the difference between the option's strike price and the market price of the underlying futures contract.
• B) the mark- to- market value divided by the strike price.
• C) the strike price of the option multiplied by the mark- to- market value.
• D) the difference between the option's strike price and its original purchase price.

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Definitions:

Accounting Break-even

Accounting Break-even is the point at which a company's revenues exactly cover its expenses, excluding financing costs and taxes.

Contribution Margin

The selling price per unit minus the variable cost per unit, used to determine how sales affect net income.

Sales Projections

Estimates of the future sales revenue of a company, which are often based on historical sales data, market trends, and other relevant factors.