You own 200 shares of stock which you would like to have the right to sell...

You own 200 shares of stock which you would like to have the right to sell at $40 a share. The 40 call option is quoted at $.35 bid, $.40 ask. The 40 put is quoted at $.50 bid, $.55 ask. How much will it cost you to obtain the right to sell all your shares at $40 a share?

Expert Solution

To have the right to sell, I would need put options. And to buy them, I would have to pay the ask price which is $0.55. Hence, it will cost me = 0.55 x 200 = 110$

jeff jeffy answered 2 years ago

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