Rex Bought a Put on Alpha Stock with a Strike

question 6

Multiple Choice

Rex bought a put on Alpha stock with a strike price of $35 when the market price of Alpha stock was $33 a share. Alpha is currently selling at $34 a share. Which of the following statements are true given this information?
I. Rex's option is worth at least $100 today.
II. Rex's option is worthless today.
III. Rex's option has more value today than when he bought it.
IV. Rex's option has less value today than when he bought it.

• A) I and III only
• B) I and IV only
• C) II and III only
• D) II and IV only

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Definitions:

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A type of air pollution, typically a mixture of smoke and fog, that can have harmful effects on health and the environment.

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The presence of harmful or excessive quantities of substances including gases, particles, and biological molecules in Earth's atmosphere which can cause disease, death to humans, damage to other living organisms such as food crops, or the natural or built environment.

Chemical Reactions

Processes in which substances interact to form new products, involving changes in molecular structure and energy.

Exhaust Emissions

The gases and particles released into the atmosphere from an engine or other machinery combustion process.