Today, Ted Purchased 500 Shares of ABC Stock at a Price

Multiple Choice

Today, Ted purchased 500 shares of ABC stock at a price of $42.20 per share. He also purchased five put option contracts on ABC at a price of $.10 per share, an exercise price of $40 and a 1-year term. What is the maximum loss Ted can realize on his investments over the next year?

A) −$1,105
B) −$1,050
C) −$1,115
D) −$1,150
E) $0