You purchase 100 shares of ABC stock on 1/1/2019 for $20.00 per share.

On 10/1/2019 the stock goes up to $50.00 per share. You do not want short term capital gains, so you want to delay selling the shares until 2020. However, you are nervous about the stock price going down again. So you buy a put option on that amount of ABC shares with a strike price $50.00 and an expiration of 3/1/2020, paying a premium of $1.00.

On 2/1/2020 ABC stock goes back down to $25.00 per share, and the premium on your put contract goes up to $11.00. What are your total gains on the stock and the put contract if you sell both on that date?

Group of answer choices

$1,000 total gains above your initial investment

$1,500 total gains above your initial investment

$2,000 total gains above your initial investment

Zero gains above your initial investment