
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
A28

Transcribed Image Text:At the time of the initiating the contract, the price of a stock is $65. A trader sells 5
naked put option contracts on the stock with a strike price of $75 when the option
price is $5. Today, the options expires today and the stock price is $70. What is the
trader's net profit or loss?
Loss of $500
Gain of $500
Loss of $2,000
Loss of $1,500
Gain of $2,000
Gain of $1,500
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