Question
You expect Company XYZ stock prices to decrease below the current stock price level of $50. In order to take advantage of this expectation, you
You expect Company XYZ stock prices to decrease below the current stock price level of $50. In order to take advantage of this expectation, you purchase a put option on Company XYZs stock, with an exercise price of $45 and a premium of $3 per share.
Just before the expiration, stock price drops to $40. Should you exercise the put option? What will the total payoff per share be?
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Business Forecasting
Authors: John E. Hanke, Dean Wichern
9th edition
132301202, 978-0132301206
