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f you buy a put option on a stock at 110, and at expiration the market price is

ID: 2754373 • Letter: F

Question

f you buy a put option on a stock at 110, and at expiration the market price is 115,

the put will be exercised for a profit less than $5.

the put will be exercised for a $5 profit.

the put will not be exercised.

the put will be exercised for a loss more than $5.

the put will be exercised for a $5 loss.

A.

the put will be exercised for a profit less than $5.

B.

the put will be exercised for a $5 profit.

C.

the put will not be exercised.

D.

the put will be exercised for a loss more than $5.

E.

the put will be exercised for a $5 loss.

Explanation / Answer

Answer : Answer 'C' is right. The put will not be exercised. Put is working when stock price is fall. If stock price is rise investment in Put will be waste.