A Speculator May Write a Put Option on Stock with an Exercise

question 6

Multiple Choice

A speculator may write a put option on stock with an exercise price of $15 and earn a $3 premium only if he thought

• A)the stock price would stay above $12.
• B)the stock volatility would increase.
• C)the stock price would fall below $18.
• D)the stock price would stay above $15.
• E)the stock price would rise above $18 or fall below $12.

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Definitions:

Aquatic Amphibians

Amphibians that live in water at least during part of their life cycle, often possessing adaptations like gills for underwater respiration.

Chemoreceptors

Sensory receptors that detect chemical stimuli in the environment or the body, such as in the nose, mouth, and blood vessels.

Electroreceptors

Sensory organs in some aquatic animals that detect electric fields.

Nociceptors

Sensory receptors present chiefly in the skin and viscera that detect harmful stimuli, signaling potential damage to the nervous system.