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Cathy is bullish on Tencent; so she instructs her broker to sell 15/7/2020 European 500 put...

Cathy is bullish on Tencent; so she instructs her broker to sell 15/7/2020 European 500 put options on Tencent with an exercise price of $400 each share. Sandy agrees to buy these options and pays the premium of $7 each option. Without taking any transaction costs into consideration,

  1. what will be Sandy’s gain or loss if Tencent’s price is $385 each share on 15/7/2020?
  2. what would be Cathy’s potential maximum loss on 15/7/2020?
  3. what is Cathy’s break-even price?
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IF ANY QUERY, FEEL FREE TO ASK THEM AND GET RESOLVED Solution Gain/-Loss on Short PUT option is represented as:- Gain/-Loss =

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