QUESTION 24 You have a short position in a put option on Proctor & Gamble stock....

Question

Question

Answer 1

Answer #1

Put option is the right to sell the underlying share at a specified price on a future date

The option is exercisable by the option buyer

Since the strike price is higher than the market price on maturity, the option will be exercised

Gross Profit = 6.50-7

= -$0.50

(Since he has short position in put option)

Answer 2

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