Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
What is the price of a PUT option with strike of 100 BEFORE and AFTER the news release?
Expert Solution
I. Meaning
PUT option gives right to sell to the holder of the option, where holder sell a specific amount of an underlying asset at specific price during a certain period. It is a way to hedge against potential fall in price of an underlying asset or security.
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