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

Since the stock price is higher than the strike price, the put option would not be exercised. Therefore, the investor would only lose the cost of the option, which was $.60 per share or $60 total. The total loss is -$60.

Three Months Ago, You Purchased a Put Option on WXX