Assume the market price for Nike equals $60 per share.

You sell one put option on Nike with a Strike Price = $55 with an expiration date of Jan.

20, 2017.

The price of the option = $5.00.

Note that in class we covered the case of the purchase of a put option, here you are the

option seller.

a) If on the day the option expires (Jan. 20, 2017) Nike is trading for $45 a share.

Will the option be exercised?

b) If the option is exercised, what is your obligation in the transaction?

c) If the option is exercised, calculate your profit or loss from selling the put option

contract. Assume you sell the Nike shares at the market price if the option is exercised

Show your calculation.