Use the Figure for the Question Below

question 87

Multiple Choice

Use the figure for the question below.
-You have shorted a call option on WSJ stock with a strike price of $50. The option will expire in exactly six months. If the stock is trading at $60 in three months, what will you owe for each share in the contract?

• A) $0
• B) $60
• C) $50
• D) $10

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Definitions:

Payoffs

The returns or gains received from a particular action or investment, typically used in the context of games or economic theory.

Player A

In the context of game theory, a label for one of the participants in a strategic interaction or game.

Player B

In game theory, a participant in a strategic situation or game, distinguished from other participants by the label "B".

Sherman Antitrust Act

A landmark U.S. legislation passed in 1890 that prohibits monopolistic business practices and promotes competition.