The Seller of a Put Option on 100 Shares of Stock

question 48

Multiple Choice

The seller of a put option on 100 shares of stock makes the most profit when the

• A)option is exercised immediately.
• B)stock price exceeds the exercise price throughout the option period.
• C)exercise price exceeds the stock price throughout the option period.
• D)option is converted into shares.
• E)is not exercised until the expiration date.

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Definitions:

New Jersey Supreme Court

The highest appellate court in the state of New Jersey, responsible for interpreting and applying the law in state court cases.

New York Trial Court

The initial level of court in New York State where cases are heard in the first instance; includes various courts such as the Supreme Court for civil matters, and the Criminal Court for criminal matters.

Binding

Implies an agreement, contract, or legal decision that is enforceable and must be adhered to by the parties involved.

U.S. Constitution

The supreme law of the United States, outlining the national frame of government and the fundamental rights of citizens.