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A Strategy Consists of Buying a Market Index Product at $830

Question 12

Multiple Choice

A strategy consists of buying a market index product at $830 and longing a put on the index with a strike of $830.If the put premium is $18.00 and interest rates are 0.5% per month,compute the profit or loss from the long put position by itself (in 6 months) if the market index is $810.


A) $3.45 gain
B) $1.45 gain
C) $2.80 loss
D) $1.36 loss

Correct Answer:

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