A Speculator Purchases a Put Option for a Premium of $4

question 71

Multiple Choice

A speculator purchases a put option for a premium of $4, with an exercise price of $30. The stock is presently priced at $29, and rises to $32 before the expiration date. What is the maximum profit per unit to the speculator who owned the put option assuming he or she exercises the option at the ideal time?

• A)-$4
• B)-$3
• C)-$2
• D)$2
• E)$3

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Definitions:

Domination

An exertion of power or influence over others, often in a negative or oppressive manner.

Subordination

The process or condition of being lower in rank, status, or authority.

Psychopathology

The investigation of mental health conditions, focusing on their manifestations, origins, and remedies through a scientific lens.

Constructs

Abstract concepts or theoretical entities that are foundational to theories and are used to explain behaviors or phenomena.