A customer sells 1 ABC Corporation put for 2 on February 22, 2019, with a strike price of 50 and an expiration date of March 16, 2019. On March 15, 2019, ABC is put to the customer. Which of the following statements about this transaction is correct? a. He has an acquisition cost of $4,800 and a date of acquisition of March 15, 2007.
b. He has an acquisition cost of $4,800 and a date of acquisition of February 22, 2007.
c. He has a $200 short-term gain on the sale of his put. His cost of acquisition is $5,000 and the date of acquisition is February 22, 2007.
d. He has an acquisition cost of $5,000 and a date of acquisition of March 16, 2007.

a. He has an acquisition cost of $4,800 and a date of acquisition of March 15, 2007.

Explanation:

A Put amount gives the holder the right to sell underlying assets. As the Put was exercised, the customer would have to buy the underlying stock and the price they will pay for it is the strike price of the Put less the cost of the Put.

Options contracts come in 100s so;

Acquisition cost = (50 - 2) * 100

= 48 * 100

= $4,800.

The date of acquisition is the day the put was exercised.

D

Step-by-step explanation:

10*20=200

200 + 1020= 1220

Works for the first one

20*20=400

400+ 1020=1420

Works for the second one

30*20=600

600+1020=1620

Works for the third one, and all the others one so forth.

You take the number on the left (10, 20, 30, 40, 50, 60, 70) and times it by 20, replacing the x in the equation with the number on the left side of the table. Then you add the number from said equation to result of the multiplication from the first step.