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Stu purchased six put options on XY stock with a strike price of $45 and an option price of $2.60 per share. The option expires today when the value of the stock is $41.40 per share. What is the net profit on this investment? Ignore trading costs and taxes.

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jepessoa

Answer:

$100

Explanation:

A put option gives you the right to sell a stock at a specific strike price. In this case, the strike price is $45 per share and the market price of each share is $41.40.

The profit made with this investment = [($45 - $41.40) - $2.60] x 100* = $ x 100 = $100.

*Each option consists of 100 shares.

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