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23 January, 19:49

A customer buys 1 OEX Jan 530 Put @ $3. The overall market falls and the index closes at 529, while OEX 530 Put contracts close at $4.50. Which is the most profitable action?

A. Close the position

B. Exercise the position

C. Let the position expire

D. Roll-up the position

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Answers (1)
  1. 23 January, 20:19
    0
    A) Close the position

    Explanation:

    The customer should close the position. That way he will be able to earn the largest possible profit of $150 ( = ($4.50 - $3.00) x 100). By closing the position the customer is ending his investment in that specific security by selling his investment option.
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