Question

# I buy five PUT options on Walmart with a strike price of \$97.23.The option premium is...

I buy five PUT options on Walmart with a strike price of \$97.23.The option premium is 79 cents. Suppose the price of Walmart is \$95.50 a share and I choose to exercise the option. What are my total gains or losses?

Please provide the total dollar amount of gains or losses not the amount per share.

Solution - In the Question given - we have a put option

Excersice Price (Strike price ) per put option = \$97.23.

Spot rate on Expiry per put option = \$95.50

Option Premium per put option = 79 cents

Gross profit per put option = Excersice price - Spot rate as on Expiry

Gross profit per put option = \$97.23 - \$95.50

Gross profit per put option = \$1.73

Total Goss Profit on Five put option is = \$1.73 * 5 = \$8.65.

Net profit per Put Option = Excersice price - Spot rate as on Expiry - Option Premium

Net Profit per Put Option = \$97.23 - \$95.50 - 79 cents

Net Profit per Put Option = \$0.94

The Total Gain on Five put option is = \$0.94 * 5 = \$4.70.