Stanley Saeli is an investor who is bullish on LSL Corporation.Currently,LSL Corp.is trading at $51.To profit from his position,Saeli decides to sell put options on LSL Corp.that have a strike price of $45 and 1 year until expiration.The premium that he would receive on the option is $2.50.What is the most that Saeli can expect to gain per put option?

Question

Quizplus · Accepted Answer

The most that an investor who sells an option can gain is the premium he sold the option for.In this case the most that Saeli can gain is the $2.50 he received when he sold the option,regardless of how the stock of LSL Corp.moves.

Stanley Saeli Is an Investor Who Is Bullish on LSL