You write one MBI July 120 put contract (equaling 100 shares) for a premium of $5. The option is held until the expiration date, when MBI stock sells for $123 per share. You will realize a ______ on the investment.
Multiple Choice
$300 loss
$300 profit
$500 profit
$800 profit
The profit of a written put option = premium paid (If the price of underlying stock at expiry is higher than the exercise price of the put option).
In this case, the price of underlying stock at expiry ($123) is higher than the exercise price of the put option ($120).
Profit = $5 per share
total profit = profit per share * number of share per contract
total profit = $5 * 100 = $500
You write one MBI July 120 put contract (equaling 100 shares) for a premium of $5....
You write one MBI July 120 put contract (equaling 100 shares) for a premium of $5. The option is held until the expiration date, when MBI stock sells for $123 per share. You will realize a ______ on the investment. Multiple Choice A) $500 profit B) $300 profit C) $800 profit D) $300 loss
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