You Sold a Put Contract on EDF at an Option

question 58

Multiple Choice

You sold a put contract on EDF at an option price of €.40.The option had an exercise price of €20.The option was exercised.Today,EDF is selling for €19 a share.What is your total profit or loss on all of your transactions related to EDF assuming that you close out your positions in this share today? Ignore transaction costs and taxes.

• A)-€140
• B)-€60
• C)€40
• D)€60
• E)€140

---

Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with dividends that are paid out before those of common shareholders.

Treasury Stock

Securities initially released and afterward repurchased by the issuer, lessening the total shares actively traded in the market.

Reissued

When a previously issued stock or bond is sold again by the corporation, often after being bought back from the market.

Paid-In Capital

The total amount of money shareholders have invested in a company in exchange for equity, including shares at par value and additional paid-in capital.