You Own 300 Shares of Delta Stock, Which Is Currently

question 14

Multiple Choice

You own 300 shares of Delta stock, which is currently worth $42 a share. You just paid an option premium of $.70 to buy 3 put contracts on this stock with a strike price of $40. What is the maximum loss per share you are avoiding by purchasing the option contract?

• A)$40.00
• B)$42.85
• C)$44.15
• D)$47.00
• E)$53.85

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Definitions:

Trait Anxiety

A personality characteristic that reflects a tendency to perceive a wide range of situations as threatening, leading to a more frequent and intense experience of anxiety symptoms.

Mild Anxiety

A lower intensity level of anxiety that can cause discomfort or worry but does not significantly impair daily functioning.

Displacement

In psychology, a defense mechanism where negative emotions are transferred from the original source to a safer or less threatening target.

Severe Anxiety

A debilitating mental health condition characterized by extreme fear, worry, and unease that significantly impacts daily functioning.