Course 2 #13

[rawl316]

Hi, does anyone else think the answer key is wrong? I got answer D. The value for that is 3500. The value for answer A is 3400. Do you agree? Any help is appreciated, as it's driving me nuts.

[sum guy]

The tricky bit to this question is that homeboy is "seling his holding" NOT "exercising" the contract. The value under the "Last" column is what someone will pay on the open market for the (unexercised) option right now. So if you sell 2 contracts, you get 2*100*18 = 3600.