FREE Trial

Suppose you buy 30 March 100 put option contracts. What is your maximum gain? On the expiration

Question:

Suppose you buy 30 March 100 put option contracts. What is your maximum gain? On the expiration date, Hendreeks is selling for $84.60 per share. How much is your options investment worth? What is your net gain?
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 57% (14 reviews)

Initial cost 30 100 490 14700 ...View the full answer


answer-question-section
Answered By
tutor-profile-image
Shebla K
I am an MBA graduate having experience as an Assistant Professor at University level for two years. I always prepare well for a class as I believe that only if you become an ocean you can give a bucket of water. Being a teacher was not only my profession but also my passion.
5.00+ 1+ Reviews 10+ Question Solved
Related Book For  book-img-for-question
Fundamentals of Investments Valuation and Management

Fundamentals of Investments Valuation and Management

ISBN: 978-0078115660

7th edition

Authors: Bradford Jordan, Thomas Miller

See More Books
Question Posted:
See More Questions

Related Video

A put option is a financial contract that gives the owner the right, but not the obligation, to sell an underlying asset, such as a stock or a commodity, at a predetermined price, known as the strike price, on or before a specific date, known as the expiration date. Put options are used by investors as a form of insurance against a decline in the value of the underlying asset. If an investor expects the value of an asset to fall in the future, they can purchase a put option on that asset. If the value of the asset does fall, the put option will increase in value, allowing the investor to sell the asset at the higher strike price. For example, if an investor owns 100 shares of a stock that is currently trading at $50 per share, they may purchase a put option with a strike price of $45 and an expiration date three months in the future. If the stock price falls to $40 before the expiration date, the investor can exercise the put option and sell their shares for $45 each, even though the market price is only $40. This would allow the investor to limit their losses. It\'s important to note that purchasing a put option involves paying a premium to the seller of the option, and the investor can lose the entire premium if the price of the underlying asset does not decline as expected. Put options are just one type of financial derivative and should only be used by experienced investors who understand the risks involved.

Students also viewed these Accounting questions

Executive Ethics Ii Ethical Dilemmas And Challenges For The C Suite 1st Edition - ISBN: 1681235390 - Free Book