Question

Three months ago, Central Supply stock was selling for $51.40 a share. At that time, you purchased five put options on the stock with a strike price of $52 per share and an option price of $0.60 per share. The option expires today when the value of the stock is $42.70 per share. What is your net profit or loss on this investment

Answer 1

Answer:

$4,350

Explanation:

Calculation to determine your net profit or loss on this investment

Net profit = (-$0.60 - $42.70 + $52) × 100 × 5

Net profit= $4,350

Therefore your net profit or loss on this investment is $4,350