You Sold a Put Contract on EDF Stock at an Option

question 52

Multiple Choice

You sold a put contract on EDF stock at an option price of $.40. The option had an exercise price of $20. The option was exercised. Today,EDF stock is selling for $19 a share. What is your total profit or loss on all of your transactions related to EDF stock assuming that you close out your positions in this stock today? Ignore transaction costs and taxes.

• A) -$140
• B) -$60
• C) $40
• D) $60
• E) $140

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Definitions:

Income from Operations

Profit generated from a company’s main business functions, excluding income from investments and other non-operational sources.

Service Department Charges

Costs associated with the support departments of a company, such as human resources or maintenance, which do not directly generate revenue but provide essential support to operational departments.

Direct Operating Expenses

Costs directly associated with the operation of a business, excluding overhead and administrative expenses.

Miscellaneous Administrative Expenses

Expenses that do not neatly fit into any specific category within general administrative costs, often small or irregular costs that are incurred for running a business.