You obtain the following information concerning a stock and a put option Price of the stock $42 Strike price $40 Price of the put $3 Expiration date three months You want to purchase the stock but also want to use an option to reduce your risk of loss. What is the total profit or loss if the price of the stock trades for $30 after three months?
You obtain the following information concerning a stock and a put option Price of the stock $42 Strike price $40 Price of the put $3 Expiration date three months You want to purchase the stock but also want to use an option to reduce your risk of loss. What is the total profit or loss if the price of the stock trades for $30 after three months?
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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You obtain the following information concerning a stock and a put option
| Price of the stock | $42 |
| Strike price | $40 |
| Price of the put | $3 |
| Expiration date | three months |
You want to purchase the stock but also want to use an option to reduce your risk of loss.
What is the total profit or loss if the price of the stock trades for $30 after three months?
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