Nick Fitzgerald holds a well-diversified portfolio of high-quality, large-cap stocks.The current value of Fitzgerald's portfolio is &745,000, but he is concerned that the market is heading for a big fall (perhaps as much as 20%) over the next three to six months.

He doesn't want to sell any of his stocks because he feels they all have good long-term potential and should perform nicely once stock prices have bottomed out.As a result, he's thinking about using index options to hedge his portfolio.

Assume that the S&P 500 currently stands at 2,200 and and among the many put options available on this index are two that have caught his eye:

(1) a six-month put with a strike price of $2,150 that's trading at $75

(2) a six-month put with a strike price of $2,075 that's trading at $57.50

Number of S&P 500 puts Fitzgerald would have to buy to protect his portfolio is 3

If both the market (as measured by the S&P 500) and Nick's portfolio fall by 20% over the next six months, what is the gain on puts and the loss on puts?