SIE practice questionhardPut options
A trader is short 2 ABC 40 puts at $3, and ABC falls to $33. What is the total loss if exercised?
- A$700
- B$600
- C$1,000
- D$800✓ Correct answer
Explanation
Why D — $800
The short put loss is strike price minus market price minus premium received: ($40 - $33 - $3) x 2 contracts x 100 shares = $800.
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