Imagine you are managing a copper mine and plan to sell 400 tons of copper 3 months from today. Since you do not know the future price of copper, you are considering employing a put protection strategy to manage your price risk. A put option giving you the right to sell 1 ton of copper for $5.50 per kilogram 3 months from now costs $280. This is the option you want to use.

How much money can be had with and without the put protection, if the spot price of copper in 3 months' time turned out to be:

a) $4.20

b) $5.80