You Sold Two $42

question 15

Multiple Choice

You sold two $42.50 put contracts on CTB stock at an option price per share of $1.90. The options were exercised today when the market price was $38.60 a share. What is your net profit on this investment? Ignore transaction costs and taxes.

• A) −$510
• B) −$400
• C) $300
• D) $850
• E) $1,160

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Definitions:

Confidence Interval

A variety of numerical values, obtained from statistical analysis of a sample, which probably includes the value of an unseen population characteristic.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, calculated as the square root of the variance.

Variance

A measure of the dispersion of a set of data points in a population, showing how much the data diverge from the average value.

Degrees of Freedom

The number of independent values or quantities which can vary in the calculation of a statistic, typically in the context of hypothesis testing.