You Own a September Put on CBA Corp

question 48

Multiple Choice

You own a September put on CBA Corp.with an exercise price of $80.CBA stock currently trades at $80 and the put at $5.Which of the following is definitely true?

• A) The option will continue to gain value until its September expiration.
• B) The owner should exercise now in order to avoid further losses.
• C) Decreases in the CBA stock price will be translated directly into additional option value.
• D) $20 is the maximum value for this option.

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Definitions:

MAOA

A gene that encodes the enzyme monoamine oxidase A, involved in breaking down neurotransmitters in the brain.

Warrior Gene

colloquially refers to a variant of the MAOA gene linked in some studies to aggressive behavior, though its effects are influenced by environmental factors.

Culture of Honor

A culture where personal or family reputation is extremely important and actions that threaten that reputation can lead to extreme reactions to restore honor.

Scots-Irish Herders

A group of people of Scottish and Irish ancestry, particularly those who settled in the Appalachian regions of the United States and were known for their herding skills.