A Strategy Consists of Longing a Put on the Market

question 9

Multiple Choice

A strategy consists of longing a put on the market index with a strike of 830 and shorting a call option on the market index with a strike price of 830.The put premium is $18.00 and the call premium is $44.00.Interest rates are 0.5% per month.Determine the net profit or loss if the index price at expiration is $830 (in 6 months) .

• A) $0
• B) $23.67 loss
• C) $26.79 gain
• D) $28.50 gain

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Definitions:

Conclusion

The final part of something, such as an argument or piece of writing, summarizing the main points and often expressing a final judgment or decision.

Invalid Arguments

Arguments that fail to follow logical form, where the conclusion does not logically follow from the premises.

Unsound

Not based on solid reasoning or logic; flawed or lacking in stability.

Valid Deductive Arguments

Arguments in which, if the premises are true, the conclusion must also be true, demonstrating a logical structure that ensures the truth of the conclusion.