Recently You Bought a Call and a Put Option on a Stock

question 41

Multiple Choice

Recently you bought a call and a put option on a stock with a common exercise price of $75.The call premium was $5 and the put premium was $3.You will make money from this position if the stock price is:

• A)greater than $75, but less than $78.
• B)greater than $75, but less than $80.
• C)greater than $72, but less than $75.
• D)less than $67, or greater than $83.

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Definitions:

Elaboration

The process of adding more information to existing, often simpler, information to create a more complex understanding.

Reverberation

The persistence of a sound in a particular space after the original sound is produced, often used metaphorically to describe a lasting effect or influence.

Self-efficacy

The belief in one's own ability to succeed in specific situations or accomplish a task.

Self-references

An individual's practice of relating information or situations back to oneself, often a cognitive process related to memory and identity.