Question
You decide to write a put option. The given strike price on the Put is $144.00 The premium of the put option is $5.00 The
You decide to write a put option.
The given strike price on the Put is $144.00
The premium of the put option is $5.00
The stock price on the stock is $147.00
You want to conduct a sensitivity analysis of the relationship between the expected future possible stock prices and the ultimate payoff value of the Put Position.
The stock price range should be $120 thru $160 with increments of $1.
Which of the following statements is the most accurate as it pertains to the Writer of the Put?
A. According to the graph of possible stock prices, the Writer of the Put is subject to Unlimited losses if prices decline below $139.00.
B. The writer of the Put Option is Bearish on the movement of future prices.
C. According to the graph of possible stock prices, the Writer of the Put is subject to limited profits of $4.00.
D. According to the graph of possibilities price, the Writer of the Put is subject to limited losses if prices decline below $139.00.
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