An August CDD Weather Option Is Offered on the Cumulative

question 4

Multiple Choice

An August CDD weather option is offered on the cumulative monthly CDD at an Atlanta weather station. An investor has a long call with a strike price of 375 and a short call with a strike price of 400. The payment is $10,000 per degree day. What is the maximum payoff?

• A) $500,000
• B) $250,000
• C) $100,000
• D) $50,000

---

Definitions:

Nervous Laughter

A physiological response where an individual laughs in reaction to stress, nervousness, or discomfort.

Stress

A state of strain and pressure that can be caused by various external and internal factors, leading to emotional and physical health issues.

Law Of Attraction

The belief that positive or negative thoughts bring positive or negative experiences into a person's life.

Murphy's Law

The adage stating that if something can go wrong, it will, often leading to unexpected issues or complications.