Three Months Ago You Bought a Put Option with an Exercise

question 94

Multiple Choice

Three months ago you bought a put option with an exercise price of $100 and a premium of $4. If the stock price at expiration of this option is $92, what is your return on investment?

• A) -100%
• B) -50%
• C) 100%
• D)50%

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Definitions:

Cheque

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or a named party.

Notice

A formal communication or announcement, which can be in written or verbal form, informing individuals or parties about specific information, conditions, or requirements.

Conditional Contract

A contract whose validity or enforcement depends on the fulfillment of certain conditions.

Assignment

The transfer of rights, property, or responsibilities from one party to another.