A Put Option Is Currently Selling for $6 with an Exercise

question 48

Multiple Choice

A put option is currently selling for $6 with an exercise price of $50. If the hedge ratio for the put is −0.30, and the stock is currently selling for $46, what is the elasticity of the put?

• A) 2.76
• B) 2.30
• C) −7.67
• D) −2.76
• E) −2.30

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Definitions:

Chronic Serous

Refers to a prolonged fluid-producing (serous) inflammation or effusion, often seen in certain medical conditions.

Otitis Media

An infection or inflammation of the middle ear.

Equilibrium

A state of physical balance or a condition in which all competing forces or influences are balanced in a biological system or physical body.

Eustachian Tube

A canal that connects the middle ear to the nasopharynx and helps equalize air pressure on both sides of the eardrum.