2. Determine your uncle’s profit and return using the protective put.

a. Identify the expiring put with an exercise price closest to, but not below, the current stock price. Determine the investment required to protect all 10,000 shares.

b. Determine the put price at expiration for each stock price at $5 increments within a range of $20 above and below Walmart’s current price using Eq. 21.2.

c. Compute the profit (or loss) on the put for each stock price used in (b).

d. Compute the profit on the stock from the current price for each stock price used in (b).

e. Compute his overall profit (or loss) of the protective put; that is, combining the put and his stock for each price used in

(c) and (d).

f. Compute the overall return of the protective put.