Question

**Suppose you hold a put on a stock that has dropped
significantly below the strike price and there is 3 months left
until expiration. You very much want to get out of the option
position. What would you do and why?**

Answer #1

Current market price of a put option is lower then strike price of the put option, it means that the put option can be exercised because the share prices already gone down beyond the expectation of the option holder.

Hence I would look to exercise the contract and realise the profit as the current market price is lower than the strike price.

So I would sale out my put option, in the market as it is exercisable now and I would try to realise my profit. This would be my decision because option is now not in the money and it will realise my gains

Suppose you hold a put on a stock that has dropped
significantly below the strike price and there is 3 months left
until expiration. You very much want to get out of the option
position. What would you do and why?

-You wrote a put option on AAPL stock with a strike price of
$140 and a put premium of $17.35. The stock price at expiration is
$115.00. What is your profit or loss?
- You bought a put option on the SPY ETF with a strike price of
$195 and a put premium of $0.95. The stock price at expiration is
$190.50. What is your profit or loss?
-You took a “bear spread” position on the VXX EFT by buying...

Suppose that you own an American put option on a non-dividend
paying stock with a strike price of $50 that will expire in six
months. The current stock price is $1, and the six-month risk- free
rate of interest is 5% with continuous compounding
(a) If you exercise the put today and invest the proceeds, how
much will you have in six-months?
(b) What is the maximum payoff you can obtain if you keep the
option until expiration? Explain.

Intel stock price is $21 and Intel stock put
option with a strike price X=$25 and August expiration has
a premium P=$5.5 as of right now. You just bought the put
option at P=$5.5 and will hold it till the expiration date.
1) For the option premium, how much are the intrinsic value and
time value? (4 points)
2) What would be your profit / loss if the stock price of Intel
is $30 on the expiration date? (3 points)...

Suppose you buy a stock, buy a put option with a strike price of
$80 on the stock, and write a call option on the stock with a
strike price of $100. What is the total payoff (not profit) if the
stock price at expiration is $125?

1. A put option has strike price $75 and 3 months to expiration.
The underlying stock price is currently $71. The option premium is
$10. "What is the time value of the put option?
Would this just be 0? Or: 71-75=-4 then 10-(-4)= 14?
2. The spot price of the market index is $900. After 3 months,
the market index is priced at $920. An investor had a long call
option on the index at a strike price of $930...

Suppose that a June put option on a stock with a strike price of
$60 costs $4 and is held until June. Under what circumstances will
the holder of the option make a gain? Under what circumstances will
the option be exercised? Draw a diagram showing how the profit on a
short position in the option depends on the stock price at the
maturity of the option.
**Can you please explain step by step on how to do this
question***...

Suppose you bought one put option for one ounce of gold with a
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option and you held the option until expiration. Suppose the market
price of gold is $1,500 per ounce at expiration. What is your gain
or loss on the option contract?

You write an put option on JNJ stock with a strike price of $60
put, for a premium of $5. The stock price of JNJ is $58 at the
expiration date. Ignoring transactions costs, what is your profit
of writing this option?
Group of answer choices
$3
$2
$5
$0
$7

3. Suppose you buy a call and put option that has the same
strike price of $75 and same maturity. Call costs $5 and put costs
$4. Graph the profits and losses at expiration for different stock
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stock price at maturity is $80, what is your profit or loss?

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