Answer:
A) $1,000 gain
Explanation:
When a client buys a straddle, he is purchasing a call and a put option on the same stock with the same strike price and expiration date.
this client bought 5 ABC Jan 30 calls and 5 ABC Jan 30 puts:
each contract was worth $700 (= $3,500 / 5 contracts)
If the price of the stock fall below $30, the call option will not be taken, but the put option will be enforced. Since the value of the stock is $21, this means that the put option resulted in a $900 profit (= ($30 - $21) x 100).
The client paid $700 for each option, therefore his profit per option = $900 - $700 = $200
His total profit = $200 x 5 options = $1,000
Gross pay<span> is almost always </span>greater<span> than </span>net pay<span>, as </span>net pay<span> is after taxes, benefits, etc. </span>Gross pay<span> is what the company tells you that they will </span>pay<span> you.</span>
Under firm-commitment underwriting, the underwriter bears the entire risk that the shares will not be sold to the public at the specified offering price.
What is Underwriter?
Any person who assesses and takes on another party's risk in exchange for payment—which frequently comes in the form of a commission, premium, spread, or interest—is an underwriter. While underwriters work for insurance firms, agents and brokers represent both consumers and insurance companies. The mortgage, insurance, equity, and some prevalent forms of debt security trading are just a few of the financial industries where underwriters play a crucial part. Sometimes referred to as a book runner, a lead underwriter holds this position.
To learn more about Underwriter
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The answer for this question would be
A) Rationing or the first option.
