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If you paid $1.00 per put option, then your profit would be $3.50 $1.00 = $2.50 per share. The point of purchasing a European option
If you paid $1.00 per put option, then your profit would be $3.50 $1.00 = $2.50 per share. The point of purchasing a European option is to limit the risk of a decrease in the per-share price of the stock. Suppose you purchased 200 shares of the stock at $28 per share and 55 six-month European put options with an exercise price of $26. Each put option costs $1.
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