You sold a put contract on EDF at an option price of €.40.The option had an exercise price of €20. The option was exercised.Today, EDF is selling for €19 a share.What is your total proﬁt or loss on
All of your transactions related to EDF assuming that you close out your positions in this share
Today? Ignore transaction costs and taxes.

Question

Quizplus · Accepted Answer

Since the option was exercised, you must buy the stock at the exercise price of €20, even though it is currently selling for €19. This means you have a loss of €1 per share. However, you received €0.40 for selling the put contract, which offsets some of your losses. Therefore, your total loss per share is €0.60. Since options contracts are typically for 100 shares, your total loss is €60.

You Sold a Put Contract on EDF at an Option