You sold a put contract on EDF at an option price of €.40.The option had an exercise price of €20.The option was exercised.Today,EDF is selling for €19 a share.What is your total profit or loss on all of your transactions related to EDF assuming that you close out your positions in this share today? Ignore transaction costs and taxes.

Question

Quizplus · Accepted Answer

You received €40 from selling the put option. When the option was exercised, you had to buy the stock at €20, costing you €2000 for 100 shares. Selling the shares at €19 gives you €1900. Your total loss is €100, but after accounting for the €40 received, your net loss is €60.

You Sold a Put Contract on EDF at an Option