Ted buys 40 PUT option contracts Each contract consists of 100 shares Exercise price $4.50 per share;

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Ted buys 40 PUT option contracts

Each contract consists of 100 shares

Exercise price $4.50 per share; Premium $0.80; Spot price at expiry $7.00

a) How much does it cost to purchase the 40 contracts? (Ignoring brokerage costs)

b) How much will Ted receive if the option is exercised?

c) How much will Ted receive if he sells the underlying shares directly in the market?

Related Book For answer-question

College Physics

ISBN: 978-0495113690

7th Edition

Authors: Raymond A. Serway, Jerry S. Faughn, Chris Vuille, Charles A. Bennett

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Posted Date: May 12, 2023 01:52 AM

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Ted buys 40 PUT option contracts Each contract consists of 100 shares Exercise price $4.50 per share;

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a To purchase 40 PUT option contracts Ted would spend the following amount ... View the full answer

College Physics

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