Question
Suppose you purchase 12 put contracts to TREMP Co. stock. The strike price is 38$ and the premium is 1.7$. At expiration, the stock is
Suppose you purchase 12 put contracts to TREMP Co. stock. The strike price is 38$ and the
premium is 1.7$. At expiration, the stock is selling for 35$ per share.
Hint: A single put option contract gives the option holder the right to sell 100 shares of stock.
a) What is your put option worth per contract?
b) What is your net profit?
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
To calculate the value of the put option per contract you need to determine the intrinsic value The ...
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Fundamentals Of Investments Valuation And Management
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
10th Edition
1266824014, 9781266824012
