Suppose You Purchase a Put Option to Sell General Motors

question 55

Essay

Suppose you purchase a put option to sell General Motors common stock at $80 per share in March. The current price of GM stock is $83 and the time value of the option is $1. What is the intrinsic value of the option?

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Definitions:

Beliefs And Expectations

Refers to the perceptions and anticipations an individual has about the world, often influencing their behavior and decision-making.

Parallel Processing

A method of information processing in which multiple data streams are processed simultaneously.

Serial Processing

A cognitive approach where the brain processes information in a linear, step-by-step sequence, one item at a time.

Bottom-up Processing

A cognitive process where perception starts with an incoming stimulus and builds up to the comprehensive perception, without preconceived cognitive models.