An investor has exchange-traded put options to sell 100 shares for $20. There is a 2-for-1...
An investor has exchange-traded put options to sell 100 shares for $20. There is a 2-for-1 stock split. Which of the following is the position of the investor after the stock split?
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Put options to sell 200 shares for $10 |
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Put options to sell 100 shares for $10 |
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Put options to sell 100 shares for $20 |
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Put options to sell 200 shares for $20 |
Homework Answers
Answer: The correct option is : Put options to sell 200 shares for $10
Explanation:
In case of stock splits, the number of stocks increases whereas the
strike price decreases.
In the given question, as it is a 2 for 1 split, the number of stocks doubles, however the strike price halves.
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