Question
An American Put option expiring 6 months from now on a certain stock has a strike price of $100 and the premium paid for the
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An American Put option expiring 6 months from now on a certain stock has a strike price of $100 and the premium paid for the put was $20. Today, the stock price fell to $20 per share. Please mark the only incorrect statement about the put option.
a. The break-even point for the put option is $80
b. The maximum loss for the buyer of the put will be $20
c. The maximum net loss for the writer of the put would be $100
d. If the buyer were to exercise the put today, its profit would amount to $60
An American Put option expiring 6 months from now on a certain stock has a strike price of $100 and the premium paid for the put was $20. Today, the stock price fell to $20 per share. Please mark the only incorrect statement about the put option.
| a. | The break-even point for the put option is $80 | |
| b. | The maximum loss for the buyer of the put will be $20 | |
| c. | The maximum net loss for the writer of the put would be $100 | |
| d. | If the buyer were to exercise the put today, its profit would amount to $60 |
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley Eakins
6th Edition
0321374215, 9780321374219
