You Wrote Ten Put Option Contracts on JIG Stock with a Strike

question 77

Multiple Choice

You wrote ten put option contracts on JIG stock with a strike price of $40 and an option price of $.40.What is your total profit on this investment if the price of JIG is $41.05 on the option expiration date?

• A)$6,450
• B)$5,650
• C)$400
• D)−$5,650
• E)−$6,450

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Definitions:

Average Variable Cost

The per unit variable cost of production, calculated by dividing total variable costs by the quantity of output produced.

Simulation Analysis

A process of modeling a real-world situation to study the effects of different parameters and anticipate possible outcomes.

Net Present Value

A financial metric that calculates the value of a series of cash flows by discounting them back to the present using a specific discount rate.

Variable Cost

Expenses that vary depending on the amount of products or services a company generates.