A 3-Month Put Has a Strike Price of $50 and an Option

question 80

Multiple Choice

A 3-month put has a strike price of $50 and an option premium of $3.10. The underlying stock is selling for $47.80 per share. What is the time value of the put?

• A)$0
• B)$.60
• C)$.90
• D)$1.10
• E)$2.20

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Definitions:

Hysteria

An outdated term historically used to describe a wide range of psychological disorders characterized by exaggerated or uncontrollable emotion or excitement.

Thanatos

In Freudian psychology, a concept representing the death drive or instinct, which coexists with the life instinct (Eros) and drives aggressive and destructive behavior.

Psychic Epidemics

Phenomena in which large numbers of people begin to engage in unusual behaviors that appear to have a psychological origin.

Self-Hypnotic Suggestion

A technique of self-induction to reach a state of heightened suggestibility for personal improvement or therapeutic purposes.