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NEW QUESTION: 1
Section B (2 Mark)
Mr. Nimesh is bullish about ABC Ltd stock. He buys ABC Ltd. at current market price of Rs. 4000 on 4 July.
To protect against fall in the price of ABC Ltd. (his risk), he buys an ABC Ltd. Put option with a strike price Rs.3900 (OTM) at a premium of Rs. 143.80 expiring on 31st July.
What would be the Pay-off of the strategy if the stock closes on 4200 at expiry?
A. 56.2
B. 256.2
C. -143.2
D. 0
Answer: A

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