Question
1. Selling of put option will be indicated of bullish position. Net proceeds= 10*100*5= 5000 A. If contract is expiring at 65, it will mean
1. Selling of put option will be indicated of bullish position. Net proceeds= 10*100*5= 5000
A. If contract is expiring at 65, it will mean that the option will not be exercised and entire premium will be the gain. The gain will be 5000.
B. If the contract is expiring at 60, the entire premium will also be gained, because the option holder will not be exercising his options. Benefits on gain of premium will be 5000
C. When the contract is expiring at 55, it will mean that there would be exercising of the options and loss would be= (60-55)*10*100= 5000, which will be set off with the option premium of 5000 and there would be no gain no loss.
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