You write one MBI July 120 put contract (equaling 100 shares) for a premium of $5....

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Question

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

business finance

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Answer 1

Answer #1

Put option contract exercise price = 120

Premium received = $5

Market value on expiry date = $123

Since , market value is greater than exercise price, put option contract is lapsed

So Net profit will be the premium received

$5 * 100 = $500 profit.

You will realize a $500 profit on the Investment

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Answer 2

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