Based on the context clues, penury most likely means:
C) poverty
Explanation:
The word penury refers to a situation of extreme poverty or need, a situation of destitution. But even if we do not know the meaning, we can guess it from the context clues in the passage. Right after mentioning the character had never known such penury before, the narrator explains the character has absolutely no money, no place to go and spend the night, no food to eat. He is actually in the corner of an alley, trying to protect himself from the cold wind with newspapers and boxes to get some sleep. From all those facts, we can safely assume that penury refers to poverty.
