You own ﬁve put option contracts on XYZ with an exercise price of €25.What is the total intrinsic value of these contracts if XYZ is currently selling for €24.50 a share?

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Quizplus · Accepted Answer

The intrinsic value of a put option is calculated as the exercise price minus the current stock price, when the exercise price is higher. Here, it's €25 - €24.50 = €0.50 per share. Since each contract typically covers 100 shares, one contract's intrinsic value is €0.50 * 100 = €50. For five contracts, it's €50 * 5 = €250.

You Own ﬁVe Put Option Contracts on XYZ with an Exercise