You Own 5 Put Option Contracts on JL Industrial Stock

question 63

Multiple Choice

You own 5 put option contracts on JL Industrial stock.You paid an option premium of $1.15 for a strike price of $27.50.On the option expiration date,the stock was selling for $24.00 a share.What is your percentage return?

• A) -100 percent
• B) -18.75 percent
• C) 71.26 percent
• D) 194.00 percent
• E) 204.00 percent

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Definitions:

Reasonable Expectations

The anticipation or belief regarding a particular outcome or behavior under ordinary circumstances by a reasonable person.

Condition Subsequent

A future event or circumstance that, if it occurs, may terminate a party's obligation under a contract.

Constructive Condition

An implied condition in contracts that must be met before the obligation of the other party becomes due, even if it is not explicitly stated in the contract itself.

Impracticability

A doctrine that excuses a party from performing a contract when unforeseen events make performance excessively difficult or expensive.