1. On October 6, 2019, Miss Mimie bought 10 put option contracts for FFM Incorporation, with strike price of $30, expiring in January 2020, at $2.20 per share, paying a typical commission of $9.95 per trade plus $0.75 per contract. FFM Incorporation price drops to $25 per share by expiration day in January 2020. Miss Mimie must exercise her put option, allowing her to buy 1,000 shares of FFM Incorporation in the open market for $25 per share, and selling it for $30 per share to a put buyer.

You are required to compute.

1. Total buying cost for the 10 calls contracts. (4 marks)

2. Total selling cost for the 10 calls contracts. (4 marks)

3. Net profit of the contracts. (4 marks)

4. Rate of return for 2 months. (4 marks)