Assume that you buy a share of stock, and a put option:

Purchase price of Stock A: $25

Put option strike price: $25

Option expiration date: June 30, 2022

Price of put option: $5

CV means the value of the combination of your shares and options minus whatever you paid to buy the options.

Answer these questions:

a) What is the CV in dollars if the stock goes up to 50? (Do not use $ sign.) Correct Answer: 45

b) How much profit would you make on your combined investment in the stock and put if the stock goes up to 50? (Remember to deduct the cost of the option.) Express in dollars, but do not use $ sign. Correct Answer: 20

c) "CV means the value of the combination of your shares and options minus whatever you paid to buy the options.

What is the CV in dollars if the stock goes down to 5? (Do not use $ sign.) Correct Answer: ? (not -5)

d) What would be your profit or loss on your combined investment in the stock and put if the stock goes down to $5?

Express in dollars, but do not use $ sign. If you suffered a loss, express that as a negative number. Correct Answer: ? (not 15)