Question

The price of a stock is $64. A trader buys 1 put option contract on the stock with a strike price of $60 when the option price is $10. The trader makes a profit when the stock price is below _______________

Answer 1

Answer:

stock price is below $50

Explanation:

given data

price of a stock = $64

strike price =  $60

option price = $10

solution

we know here that stock sell for $60 and pay for $10

so that here price of stock is

stock price = $60 - $ 10

stock price = $50

and net profit will be

net profit = $10 - $10

net profit = 0

so that we can say stock price is less than $50 for trader for making profit 0 or greater than 0.

so price will be below than $50