If an Investor Buys a 100-Share Put Option for $400

question 150

Multiple Choice

If an investor buys a 100-share put option for $400 with an exercise price of $40 and the underlying price per share of the stock at expiration is $32, what is the amount of profit or loss, ignoring brokerage fees?

• A) There would be a profit of $800.
• B) There would be a profit of $400.
• C) There would be a loss of $400.
• D) There would be a loss of $800.

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