Q1: You believe Badtimes Inc. stock will depreciate in 9 months and decide to use 10 put options to trade based on your belief At the time you open your position, Badtmes stoc k sold for $11/share, and nine month put options on the stock had an exercise price of $7 and a premium of $ 60. If at expiration Badtimes is selling for $10, what is your dollar gain or loss?

A. -2400 B. 2400 C. -600 D. 600 E. None of the above

Q2: If a call option isn't exercised on or before the expiration date, the option writer will have a positive rate of return from the contract.

True or false

Q3: You bought 6 put contracts with a premium of $4. What is the maximum profit that you could gain from this strategy if the exercise price is $60?

A. 38400 b. 5600 c. 33600 d. Cannot be determined