Jason is an investor who owns 1 share of XYZ and a sold a call option...

Jason is an investor who owns 1 share of XYZ and a sold a call option on 1 share of XYZ. The exercise price of the put option is $100 and XYZ currently trades at $99. The option premium was $3. If the price of XYZ at expiration is $50, the payoff of Jason’s position is:

-$3

$100

$50

$99

Solutions

Expert Solution

The correct option is $ 50.( from the option position)

In case of Put option the payoff will be paid to the put buyer will be Exercise price - Share price

In this Exercise price is $ 100 and the share price at expiration is $ 50.

= $ 100 - $ 50.

= $ 50.

jeff jeffy answered 1 year ago

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