If I buy a put option at $130 with an option premium of $2, but the stock price is $105, what is my holding period return?
Profit = [Max{(Strike Price - Stock Price at the end),0}] - Put Premium
= [Max{($130 - $105),0}] - $2 = $25 - $2 = $23
Holding Period Return = Profit / Cost of Put = $23 / $2 = 11.5, or 1150%
If I buy a put option at $130 with an option premium of $2, but the...
If I buy a put option at $130 with an option premium of $2, but the stock price is $105, what is my holding period return?
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