You Sold fiVe Put Option Contracts on QLN Stock with an Exercise

question 359

Multiple Choice

You sold five put option contracts on QLN stock with an exercise price of $45 and an option price of $2.20. Today, the option expires and the underlying stock is selling for $38.65 a share. Ignoring
Trading costs and taxes, what is the total profit or loss on this investment?

• A) -$2,075
• B) -$415
• C) $855
• D) $1,100
• E) $4,275

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Definitions:

Displacement

A vector quantity that refers to an object's overall change in position.

Amplitude

The maximum extent of a vibration or oscillation, measured from the position of equilibrium, often used in the context of waves or sound.

Medial Geniculate Nucleus

Major thalamic region concerned with audition.

Cochlea

Inner ear structure containing the auditory receptor cells.