If an Investor Buys a 100-Share Put Option for $150

question 39

Multiple Choice

If an investor buys a 100-share put option for $150 with an exercise price of $38 and the underlying price per share of the stock at expiration is $39, what is the amount of profit or loss, ignoring brokerage fees?

• A) There would be a profit of $250.
• B) There would be a profit of $150.
• C) There would be a loss of $250.
• D) There would be a loss of $150.

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Definitions:

Say's Law

An economic theory that proposes supply creates its own demand, meaning production inherently creates the consumption of equivalent value.

Aggregate Supply Curve

This represents the total supply of goods and services that firms in an economy are willing to sell at a given price level during a specified time period.

Macroeconomic Equilibrium

A state where aggregate supply equals aggregate demand, resulting in a stable economy without tendencies to change.

Great Depression

A severe worldwide economic downturn that lasted from 1929 until the late 1930s, characterized by massive unemployment and deflation.