You purchase 5 put option contracts with a premium of $3.86 and an exercise price of...
You purchase 5 put option contracts with a premium of $3.86 and an exercise price of $80. If the stock price at expiration of the contracts is $86.27, what is your profit?
Homework Answers
Exercise price = $80
Premium = $3.86
Stock price at the time of expiration = $ 86.27
No of put options = 5
Gross payoff = ($80 - $86.27) *5 = -6.27*5 = -$31.35
Premium = 5 * 3.86 = -$19.30
Net payoff = -$50.65
Therfore loss = -$50.65
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