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A Put Is the Option to Sell Stock at $35

question 8

Essay

A put is the option to sell stock at $35. The price of the stock is $34, and the price of the put is $2.​

a. What is the intrinsic value of the put?

b. What is the time premium paid for the put?

c. What is the percentage return on an investment in the put if at the expiration of the put the price of the stock is $31?


Definitions:

Cognitive Therapy

Therapy that teaches people new, more adaptive ways of thinking and acting; based on the assumption that thoughts intervene between events and our emotional reactions.

Behavior Modification

A form of psychotherapy that uses basic learning techniques to change maladaptive behaviors to more desirable ones.

Anxiety-arousing

Stimuli or situations that evoke feelings of fear, apprehension, or nervousness in individuals.

Controlling Consequences

Managing or influencing the outcomes of actions or behaviors to achieve desired results.

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