A Speculator Purchases a Put Option on Treasury Bond Futures

question 57

Multiple Choice

A speculator purchases a put option on Treasury bond futures with a September delivery date with an exercise price of 85-00. The option has a premium of 2-00. Assume that the price of the futures contract decreases to 82-00 on the expiration date and the option is exercised at that point (if it is feasible) . What is the net gain?

• A)$1,968.75
• B)$3,750.00
• C)$3,000.00
• D)- $2,000.00
• E)$1,000.00

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Definitions:

Amygdala

Two lima-bean–sized neural clusters in the limbic system; linked to emotion.

Reward Centers

Areas in the brain, particularly within the limbic system, that are responsible for the sensation of pleasure in response to certain stimuli, playing a crucial role in motivation and reward-based learning.

Hypothalamus

A region of the brain responsible for the regulation of various bodily functions, including hunger, thirst, temperature, and hormonal activity.

Limbic System

A complex system of nerves and networks in the brain, involving several areas near the edge of the cortex concerned with instinct and mood. It controls basic emotions (fear, pleasure, anger) and drives (hunger, sex, dominance, care of offspring).