Question

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.

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.**

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