The premium of a call with a strike price of $35 is $3.0 per share, and...
The premium of a call with a strike price of $35 is $3.0 per share, and the premium of a put option with a strike price of $34 is $2.0 per share. The maximum loss per-share to the writer of the put will be __________, and the maximum gain per-share to the writer of the call will be _________.
A. $33, $31.50
B. $36, $3.0
C. $32, $3.0
D. $34, $35
Homework Answers
C. $32, $3.0
The writer of the put will lose money when the price of the stock goes down. The price of the stock can go down up to a maximum of zero. But since he has already received the the premium, his net loss will be $32.
The writer of a call option will have the premium received as his net profit.
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