Question

You have purchased a put option on Pfizer common stock. The option has an exercise price of $52 and Pfizer’s stock currently trades at $54. The option premium is $0.70 per contract.

a.	What is your net profit on the option if Pfizer’s stock price does not change over the life of the option? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))

Net profit

$  per share

b.	What is your net profit on the option if Pfizer’s stock price falls to $49 and you exercise the option? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))

Net profit

$  per share

Answer 1