8. The price of a stock on February 1 is $48. A trader sells 200 put...

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Question

business finance

Answer 1

Answer #1

Trader sells 200 put options on stocks with a strike price of $40 when the option Price(premium) is $2

Excercise price when the price is $39

Payoffs for 200 options = ($40 - $39)*200

= $200

The option price(Premium)on 200 options to be received = 200 options*$2

= $400

Net/(loss) = Premium Received - Payoffs

= $ 400- $200

Net Profit = $200

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Answer 2

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