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What Is the Profit Per Share for an Investor Who

Question 2

Multiple Choice

What is the profit per share for an investor who has purchased a share of stock and two put options with an exercise price of $40, given that the purchase price of the stock was $42, each put cost $2 per share, and the stock was valued at $30 at expiration?


A) ($16)
B) ($6)
C) ($4)
D) $4 profit per share = value of stock at expiration + 2(value of put at expiration) - price of stock - 2(put premium)
= 30 + 2(40 - 30) - 42 - 2(2)

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