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

Question

Cynthia Patel

Business

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

+5

Answers (1)

Know the Answer?

Logan Wilkins · Answer 1

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.

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 positionB. Exercise the positionC. Let the position expireD. Roll-up the position

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