Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have purchased a put option on Pfizer common stock. The option has an exercise price of $53 and Pfizer?s stock currently trades at $55.

image text in transcribed

You have purchased a put option on Pfizer common stock. The option has an exercise price of $53 and Pfizer?s stock currently trades at $55. The option premium is $0.80 per contract. a. What is your net profit on the option if Pfizer?s stock price does not change over the life of the option? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16)) Net profit S per share b. What is your net profit on the option if Pfizer?s stock price falls to $50 and you exercise the option? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16)) Net profit S per share

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Trading And Investing

Authors: John Teall

1st Edition

0123918804, 978-0123918802

More Books

Students also viewed these Finance questions

Question

=+3. What are vicarious reinforcement and vicarious punishment?

Answered: 1 week ago