You sold ten put contracts on Cross Town Bank stock at an option price per share of $0.85. The options have an exercise price of

Question

3 years ago

6

You sold ten put contracts on Cross Town Bank stock at an option price per share of $0.85. The options have an exercise price of

$39 per share. The options were exercised today when the stock price was $34 a share. What is your net profit or loss on this investment assuming that you closed out your positions at a stock price of $34

Business

1 answer:

Gnoma [55] · Answer 1 · 2022-09-19T17:49:01+03:00

Answer:

-$4,150

Explanation:

Calculation to determine your net profit or loss on this investment

Using this formula

Net profit/Loss=(Option price per share-Exercise price+Stock price)×100×10

Let plug in the formula

Net loss = ($0.85 - $39 + $34) × 100 × 10

Net loss =-$4.15×100×19

Net loss = -$4,150

Therefore your net loss on this investment is -$4,150