Justin Freez Purchased a Put Option on General Auto's Common

question 100

Essay

Justin Freez purchased a put option on General Auto's common stock at $2.90. The put has a striking price of $40 and General Auto's common stock is priced at $42.00. What is the most that Justin can lose on the put option purchase?

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Definitions:

Unforeseeable Misuses

Situations or actions where a product is used in a way that could not have been predicted, possibly leading to harm or injury.

Obvious Dangers

Hazards or risks that are apparent and should be reasonably recognized by an individual, reducing or eliminating liability for injuries resulting from such dangers.

State-of-the-Art Defense

The state-of-the-art defense is a legal argument used in product liability cases to claim that the product was made in accordance with the highest level of technology and knowledge available at the time of manufacture.

Strict Liability

A legal doctrine that holds a party responsible for damages or harm caused by their actions, without the need to prove negligence or fault.