2) A put option is priced at $4 with an exercise price of $60 and an...

Question

Question

Answer 1

Answer #1

2]

a]

Option value = $0

This is because the stock price at expiry ($62) equals the option strike price ($62)

b]

Profit = option strike price - stock price at expiry - premium

Profit = $62 - $55 - $4 = $3

c]

breakeven stock price = option strike price - premium

breakeven stock price = $62 - $4 = $58

Answer 2

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