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.

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Answer #1

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.

If you have any query then please feel free to ask me in a comment. If Agree please rate the answer.

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