An investor has exchange-traded put options to sell 100 shares for $20.There is 25% stock dividend.Which of the following is the position of the investor after the stock dividend?
A) Put options to sell 100 shares for $20
B) Put options to sell 75 shares for $25
C) Put options to sell 125 shares for $15
D) Put options to sell 125 shares for $16

Question

Quizplus · Accepted Answer

The stock dividend is equivalent to a 5 for 4 stock split.The number of shares goes up by 25% and the strike price is reduced to 4/5 of its previous value.

An Investor Has Exchange-Traded Put Options to Sell 100 Shares