If, at time of expiration, the stock is trading at $147.50 per share, will you exercise your option? What is your total profit/loss in this scenario? If, at the time of expiration, the stock is trading at $158.96 per share, will you exercise your option? What is your total profit/loss in this scenario?
If, at time of expiration, the stock is trading at $147.50 per share, will you exercise your option? What is your total profit/loss in this scenario? If, at the time of expiration, the stock is trading at $158.96 per share, will you exercise your option? What is your total profit/loss in this scenario?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Walmart is currently trading at $166.42 per share.
You expect the price of the stock to fall, so you purchase 5 put options at a premium of
$5.75 ($575 per option contract), at a strike price of $162. What price does the stock need
to reach in order to break even?
If, at time of expiration, the stock is trading at $147.50 per share, will you exercise your
option? What is your total profit/loss in this scenario?
If, at the time of expiration, the stock is trading at $158.96 per share, will you exercise
your option? What is your total profit/loss in this scenario?
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