Question
Please show work! George bought a European put option contract in UWY stock from Julie with a striking price of $41.59 per share. He paid
Please show work!
George bought a European put option contract in UWY stock from Julie with a striking price of $41.59 per share. He paid $0.67 per share for this option contract. The size of the contract was 100 shares.
6. Suppose the market price of UWY stock was $41.67 per share at expiration. If the option was exercised at expiration, Julie would
A. buy the put option at $41.59 per share. B. sell the put option at $41.67 per share. C. buy a call option at $41.67 per share. D. buy UWY stock at $41.59 per share. E. buy UWY stock at $41.67 per share. F. sell UWY stock at $41.59 per share. G. sell UWY stock at $41.67 per share .
7. Suppose the market price of UWY stock at expiration is $41.67. Assume that both George and Julie are rational in the sense that if they could choose to exercise the option, then they would do so rationally. Assume that neither George nor Julie have any UWY stock at expiration, nor do they want to hold any UWY stock so that they will buy or sell stock before or after any trading by the option to return to their zero holding of stock UWY. State the net profit per share that Julie would make on this option (If Julie loses money, show it as a negative number). The "net" means taking into account the premium on the option.
8. Suppose that instead of $41.67, the market price of UWY stock at expiration is $43.34. Assume again the George and Julie are both rational and neither hold nor want to hold any UWY stock. State the net profit per share that Julie would make on this option.
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