You purchase one Microsoft July $72 put contract for a premium of $1.32. What is your...

Question

Question

You purchase one Microsoft July $72 put contract for a premium of $1.32. What is your maximum possible profit? oL nrofits Pot

business finance

Answer 1

Answer #1

Maximum possible profit is attained when the stock price of Microsoft goes to zero.

The pay off of put option upon expiry = Strike price - Stock price

= $ 72-0

= $ 72

Maximum possible profit = Profit from put option - premium paid

= $ 72 - $ 1.32

= $ 70.68

Hence, the correct answer is $ 70.68

Answer 2

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