Question
A put option has a premium of p(0)=$6 and X=$30. The stock price right now is S(0)=$25. Which of the following statement(s) could be wrong?
A put option has a premium of p(0)=$6 and X=$30. The stock price right now is S(0)=$25. Which of the following statement(s) could be wrong? Pick up ALL the wrong statements.
At expiration, the buyer of the put will not make a profit unless the stocks price goes below $30.
At expiration, the writer of the put will only experience a loss if the price of the stock exceeds $30
A protective put based on the stock and the put has a maximum possible loss of $-1
When the underlying price at expiration goes to $31, a protective put based on the stock and the put gets breakeven (i.e. no gain or loss)
DO NOT COPY FROM CHEGG I NEED A FULL EXPLANATION
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started