Three months ago,you purchased a put option on WXX stock with a strike price of $60 and an option price of $.60. The option expires today when the value of WXX stock is $62.50. Ignoring trading costs and taxes,what is your total profit or loss on your investment?

Question

Quizplus · Accepted Answer

The put option allows you to sell the stock at $60, but since the stock is at $62.50, the option is worthless. You lose the premium paid for the option, which is $0.60 per share. Assuming 100 shares per option, the total loss is $60.

Three Months Ago,you Purchased a Put Option on WXX Stock