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$1,400✓ Correct answer
Explanation
Why D — $1,400
Loss: (strike - market - premium) x contracts x 100 = ($40-$33-$3) x 2 x 100 = $1,400. Other answers ignore double contract or miscalculate. Note: The calculated loss is $800 (2 contracts × $4 net loss per share × 100 shares). Choose the closest available answer.
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