Question

INTC current stock price is 23. You sold a 22 put and bought a 21 put. The premium on the 22

put is 0.6, and the premium on the 21 put is 0.3. Analyze your gain or loss if on the expiration

day the stock price is larger than 22, between 21 and 22, less than 21.

Answer 1

1. Larger than 22: overall loss of 0.3
2. Between 21 & 22:
Maximum gain can be 0.7 and maximum loss can be 0.3
3. Less than 21: overall gain 0.7

Just for knowledge:
Note: you can get the answer directly from 2. (No need to do 1 &3- to get answers)