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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.
Long Run
A time frame in economics where all factors of production and costs are variable, allowing for complete adjustment to changes in the market or economic environment.
Profit-Maximizing
A strategy or point at which a business reaches the highest possible level of profit through the adjustment of sale prices, production costs, and output volume.
Level of Output
The total volume of goods or services produced by a firm, industry, or economy within a given period.
Perfect Competitor
A theoretical market structure in which many firms sell identical products, entry and exit are free, and no single buyer or seller can influence the market price.
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