You Purchased 6 Put Option Contracts on Mountain Builders Stock

question 98

Multiple Choice

You purchased 6 put option contracts on Mountain Builders stock at an option premium of $0.75. The strike price is $25. What is your break-even stock price?

• A) $19.90
• B) $24.25
• C) $25.00
• D) $25.75
• E) $30.10

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Definitions:

CAC 40 Index

A benchmark French stock market index that represents the 40 largest equities listed in France, measuring their performance.

Toronto 35 Index

An index that was once used to represent the performance of the 35 most significant stocks listed on the Toronto Stock Exchange.

Basis

In finance, refers to the difference between the spot price of an asset and its future price, or to the initial value used for tax purposes.

Futures Price

The agreed-upon price for the purchase or sale of an asset at a future date in a futures contract.