Gerold purchased 2 put option contracts at an option premium of $0.95 and a strike price of $40. At expiration, the stock price was $41.25 per share. What is his percentage return?
A) -100 percent
B) 0 percent
C) 15.79 percent
D) 21.62 percent
E) 31.58 percent

Question

Quizplus · Accepted Answer

Gerold's put options expired worthless because the stock price ($41.25) was above the strike price ($40). He lost the entire premium paid ($0.95 per share). Therefore, his percentage return is -100 percent.

Gerold Purchased 2 Put Option Contracts at an Option Premium