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Dorothy Santosuosso does a lot of investing in the stock market and is a frequent user of stock - index options. She is convinced that
Dorothy Santosuosso does a lot of investing in the stock market and is a frequent user of stockindex options. She is convinced that the market is about to undergo a broad retreat and has decided to buy a put option on the S&P Index. The put carries a strike price of and is quoted in the financial press at $ Although the S&P Index of stocks is currently at Dorothy thinks it will drop to by the expiration date on the option. How much profit will she make, and what will be her holding period return if she is right? How much will she lose if the S&P goes up rather than down by points and reaches by the date of expiration?
The profit from this investment would be $
Round to the nearest cent.
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