5. Ignore the time difference between the purchase of options and their expiry and provide your answer in the table below for the alternative expiry share prices.

Short seller activity in GameStop increased demand for put options. Jill decided to write 1,000 in-the-money put options with an exercise price of $10.00 for $1.80 each and covered this position by short selling 1000 shares at the market price of $9.00. Calculate her profit (per share) for the short share position, the short put position, and the hedged position if:

i) Short sellers drove the price of GameStop shares to $5.00

ii) Investors executed a short squeeze and drove the price to $380.

Share Price profit on share profit on option profit on hedge

$5.00 + =

$380 + =