What Is the Cash Settlement If a Put Futures Option

question 15

Multiple Choice

What is the cash settlement if a put futures option on 50 units of the underlying asset is exercised?

• A) (Current Futures Price - Strike Price) times 50
• B) (Strike Price - Current Futures Price) times 50
• C) (Most Recent Futures Settlement Price - Strike Price) times 50
• D) (Strike Price - Most Recent Futures Settlement Price) times 50

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Definitions:

Required Rate of Return

The minimum annual return percentage necessary to attract individual or corporate investment into a specific security or project is known as the required rate of return.

Constant Growth Rate

The assumption that a variable, such as a company’s dividends or economy, will grow at a consistent rate over time.

Expected Dividend

The forecasted payment of dividends to shareholders, based on a company’s past dividend history and future earnings projections.

Semistrong Efficient

This term refers to a form of market efficiency that assumes all publicly available information is already reflected in stock prices, including historical and fundamental data.