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.

Homework Answers

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.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
I buy three CALL options on AMD with a strike price of $32.50.The option premium is...
I buy three CALL options on AMD with a strike price of $32.50.The option premium is $5.53. Suppose the price of AMD is $36.25 a share and I choose to exercise the option. What are my total gains or losses? Please provide total dollar amount of gains or losses not an amount per share.
You buy a call option and buy a put option on bond X. The strike price...
You buy a call option and buy a put option on bond X. The strike price of the call option is $90 and the strike price of the put option is $105. The call option premium is $5 and the put option premium is $2. Both options can be exercised only on their expiration date, which happens to be the same for the call and the put. If the price of bond X is $100 on the expiration date, your...
David buys a put option on pound with a strike price of $1.8500/₤ at a premium...
David buys a put option on pound with a strike price of $1.8500/₤ at a premium of 2.60¢ per pound ($0.0260/₤) for an expiration date three months from now. The option contract is for ₤62,500. What is David’s gains/losses if the spot rate is $1.9700/₤?
You buy a put option with strike price of $40 and simultaneously buy two call options...
You buy a put option with strike price of $40 and simultaneously buy two call options with the same strike price, $40. Currently, the market value of the underlying asset is $39. The put option premium is $2.50 and a call option sells for $3.25. Assume that the contract is for 1 unit of the underlying asset. Assume the interest rate is 0%. Draw a diagram depicting the net payoff (profit diagram) of your position at expiration as a function...
Suppose you buy a stock, buy a put option with a strike price of $80 on...
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?
Ebony writes a put option on Walmart stock. At the time she writes the option, Walmart...
Ebony writes a put option on Walmart stock. At the time she writes the option, Walmart stock is trading for $144. The option premium is $3 for a put option with a strike price of $140 and expiration in one month. What is the maximum dollar profit Ebony could potentially earn? Enter your answer to the nearest cent
Assume the August call and put option on Swiss francs have the same strike price of...
Assume the August call and put option on Swiss francs have the same strike price of 58½ ($0.5850/SF), and premium of $0.005/SF. In what price range the purchase of the PUT option would choose to exercise the option? a) At all spot rates above the strike price of 58.5 b) At the strike price of 58.5 c) At all spot rates below the strike price of 58.5 d) At all spot rates below the 59 (strike price of 58.5 plus...
A call option with a strike price of $1.30/€ and a premium of $0.03/€ is executed...
A call option with a strike price of $1.30/€ and a premium of $0.03/€ is executed as the market price is $1.39/€. The buyer of the option has purchased ten contracts (one contract is for €12,500). The total profit amounts to: Question options: €7,500 $7,500 €11,250 $11,250 Question 16 (1 point) Saved A trader holds a European put option with a strike price off $1.30/€ and a premium of $0.05/€. At the expiration date the market rate is $1.40/€. What...
Suppose you write 16 put option contracts with a $80 strike. The premium is $2.40. Evaluate...
Suppose you write 16 put option contracts with a $80 strike. The premium is $2.40. Evaluate your potential gains and losses at option expiration for stock prices of $70, $80, and $90.
An investor purchases one call option (strike price $43 and premium $1.20) and purchases 3 put...
An investor purchases one call option (strike price $43 and premium $1.20) and purchases 3 put options (strike price $43 and premium $1.65) on the same underlying stock. What is the investor's total profit or loss (enter profit as positive or a loss as a negative value) per share if the stock price at expiration is $21.15?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT