A Put Option on ABC Stock Currently Sells for $4

question 69

Multiple Choice

A put option on ABC stock currently sells for $4.The exercise price and the stock price is $60.The put option has a delta of 0.5.If within a short period of time the stock price increases to $60.10, what would be the change in the price of the put option?

• A)Increases by $0.05
• B)Decreases by $0.05
• C)Increases by $0.10
• D)Decreases by $0.10

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Definitions:

Earnings

The amount of money that an individual or business receives in exchange for labor, services, or investing capital, typically measured over a specific period of time.

Deductions

To deduct or subtract; remove, take away.

Longevity

A long duration of life; lasting a long time.

Profit Sharing

A system by which employees receive a share of the profits of a business enterprise.