USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider the following information on put and call options for Citigroup

-Refer to Exhibit 16.4. Calculate the net value of a protective put position at a stock price at expiration of $20 and a stock price at expiration of $45.
A) $6.35, $18.85
B) $29.65, $42.15
C) $21.65, $34.15
D) $8, $8
E) -$8, -$8

Question

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider the following information on put and call options for Citigroup
 
-Refer to Exhibit 16.4. Calculate the net value of a protective put position at a stock price at expiration of $20 and a stock price at expiration of $45.
A) $6.35, $18.85 
B) $29.65, $42.15 
C) $21.65, $34.15 
D) $8, $8 
E) -$8, -$8

Quizplus · Accepted Answer

A protective put position involves owning the stock and buying a put option. At a stock price of $20, the net value is calculated as the stock price plus the put payoff minus the initial cost. At $45, the put expires worthless, so the net value is the stock price minus the initial cost.