Angelina sold 100 puts on a stock at a price of $1.20. The strike price is $20 and the underlying security is priced at $21.00. If the option is exercised, Angelina will:

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Angelina sold puts, meaning she has the obligation to buy the stock at the strike price if the option is exercised. Since the strike price is $20 and she sold 100 contracts (each contract represents 100 shares), she would have to buy 10,000 shares at $20 each, totaling $200,000. She initially received $1.20 per put, or $12,000 in total (100 contracts * 100 shares * $1.20). Therefore, her net cost is $200,000 (cost to buy shares) - $12,000 (received from selling puts) = $188,000.

Angelina Sold 100 Puts on a Stock at a Price