The Gamma of a Put Is Typically Highest When

question 32

Multiple Choice

The gamma of a put is typically highest when

• A)The stock price is much lower than the strike price.
• B)The stock price is in the region of the strike price.
• C)The stock price is much higher than the strike price.
• D)The information is insufficient to answer this question.

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Definitions:

U-shaped Curve

A graphical representation showing a relationship where initial decreases are followed by increases, resulting in a curve shaped like the letter "U."

Long-run

A period in which all factors of production and costs are variable, allowing firms to adjust all input levels and technology to find the most efficient scale of operations.

Excise Tax

A specific tax levied on the sale of particular goods or services, such as alcohol and tobacco, usually aimed at discouraging consumption or raising revenue.