You believe that oil prices will be rising more than expected and that rising prices will result in lower earnings for industrial companies that use a lot of petroleum-related products in their operations. You also believe that the effects on this sector will be magnified because consumer demand will fall as oil prices rise. You locate an exchange traded fund, XLB, that represents a basket of industrial companies. You don't want to short the ETF because you don't have enough margin in your account. XLB is currently trading at $ 25.03 . You decide to buy a put option (for 100 shares) with a strike price of $ 26.50 , priced at $ 1.27 . What is your profit if you are wrong and the price of XLB increases to $27.85 on the expiration date?

XLB: Materials$25.03 Calls Puts Strike Expiration Price Strike Expiration Price $20.00 November $0.21 $20.00 November $1.27 $26.50 November $0.21 $26.50 November $1.57