Question

You bought 10 contracts of TSLA October, 2020 $380 put for $65 premium. The current price for TSLA is $398.

What is the intrinsic value of the put option?

How much does the stock price has to go down before the put option is in-the-money?

How much money will you make/lose if the stock price goes down to $330, or goes up to $418?

Answer 1

Intrinsic Value = Higher of 0 and (Strike Price of Put-Current Price of Stock) = $0

Put Option is In the Money if, the Price of Stock is BELOW thr Strike Price. Therefore, Stock Price has to go down TO 379(below strike price). Therefore, Price has to go down BY (398-379) = $19

Profit per share on Put = [Higher of 0 and (Strike Price of Put-Current Price of Stock)]-Premium

10 contracts = 10*100 = 1000 shares

Therefore,

Net Profit (if $330) = [(380-330)-65]*1000 = $-15000

Net Profit (if $418) = [(0)-65]*1000 = $-65000