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for§ $ 5 we sell put option with an Execution Cost of $ 80 What a...

for§ $ 5 we sell put option with an Execution Cost of $ 80
What a total gain (loss) we will have if the share price is $ 65?

Solutions

Expert Solution

put option is a stock market instrument which gives the holder (i.e. the purchaser of the put option) the right to sell an asset (the underlying), at a specified price (the strike), by (or at) a specified date (the expiry or maturity) to the writer (i.e. seller) of the put.

Premium         Execution cost      Share price   Holder exercise option/not        Net loss

$5                         $80                       $65               Yes-Execute                        $15-$5 received as premium

                                                                                                                               =($10.)

ekkarill92 answered 2 years ago
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