Three months ago,you purchased a put option on WXX with a strike price of €60 and an option price of €.60.The option expires today when the value of WXX is €62.50.Ignoring trading costs and taxes,what is your total profit or loss on your investment?

Question

Quizplus · Accepted Answer

Since the value of WXX is above the strike price of €60, it would not make sense to exercise the put option. Therefore, the profit or loss is simply the difference between the option price and the current value of the option, which is (€0.60 - €0) = €0.60. However, since one put option represents 100 underlying shares, the total profit or loss is 100 x €0.60 = €60. Therefore, the correct answer is option B.

Three Months Ago,you Purchased a Put Option on WXX with a Strike