A Put Option on a Stock Has an Exercise Price

question 56

Multiple Choice

A put option on a stock has an exercise price of $31.If the stock price at expiration is $33.40,what is the option payoff for a short put position?

• A)$33.40
• B)-$2.40
• C)$2.40
• D)$0
• E)-$33.40

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Definitions:

Bearish Signal

An indication in financial markets that the price of an asset is expected to decline.

Overweighting

Refers to the practice of allocating a larger percentage of a portfolio to a particular asset or sector than the benchmark or average portfolio.

Recent Performance

Refers to the latest outcomes or results of an investment's or financial instrument's activity over a short-term period.

Conventional Finance Theory

A framework in economics that explains the behavior of financial markets, including the dynamics of assets and securities pricing, investment portfolios, and market mechanisms.