You Wrote Ten Call Option Contracts on JIG Stock with a Strike

question 65

Multiple Choice

You wrote ten call option contracts on JIG stock with a strike price of $40 and an option price of $.40. What is your net gain or loss on this investment if the price of JIG is $46.05 on the option expiration date?

• A) -$6,450
• B) -$5,650
• C) $400
• D) $5,650
• E) $6,450

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Definitions:

Hindsight Bias

The tendency to believe, after learning an outcome, that one would have foreseen it, also known as the "I knew it all along" effect.

Bystander Effect

A social psychological phenomenon where individuals are less likely to offer help to a victim when other people are present.

Two-factor Theory

A theory of emotion proposing that emotions are based on physiological arousal and cognitive interpretation of that arousal.

Voter Preference

The inclination or predisposition of voters towards certain candidates, parties, or policies in an election.