You purchase one IBM March 100 put contract for a put premium of $6.What is the maximum profit that you could gain from this strategy?
A) $10,000
B) $10,600
C) $9,400
D) $9,000
E) none of these

Question

Quizplus · Accepted Answer

The maximum profit from a long put strategy is the strike price minus the premium paid. In this case, the strike price is $100 and the premium paid is $6, so the maximum profit is $94 per share. Since one contract covers 100 shares, the maximum profit for the whole contract is $9,400 (100 x $94).

You Purchase One IBM March 100 Put Contract for a Put