You wrote six put option contracts on Bakers Field stock with an exercise price of $30 and an option price of $2.20.The stock price was $31.20 a share on the option expiration date.Ignoring trading costs and taxes,what is your total net profit or loss on this investment?

Question

Quizplus · Accepted Answer

The options expired worthless because the stock price ($31.20) was above the exercise price ($30). The profit is the premium received: 6 contracts * 100 shares/contract * $2.20 = $1,320.

You Wrote Six Put Option Contracts on Bakers Field Stock