Answered

Looking for reliable answers? Westonci.ca is the ultimate Q&A platform where experts share their knowledge on various topics. Get immediate and reliable answers to your questions from a community of experienced experts on our platform. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently.

You are long 10 put contracts on Cisco (CSCO) with a strike price of $55.00. The option premium is $1.75 per share, and the market price of CSCO on the day you enter the contracts is $54.25. If you are long the underlying shares of CSCO, what will the total gain or loss be of your position if you exercise the contracts when CSCO is selling for $49.00 per share

Sagot :

Tundexi

Answer:

$42.50

Explanation:

Here, buying a put option means that the option holder will gain when the share price falls below the strike price.

Strike price is $55

Premium paid is $1.75 per share

Premium paid = $1.75 * 10 = $17.5

Shares are selling for $49

=> $(55- 49) * 10 contracts = $60.

So, net profit = $60 - $17.5 = $42.5

We hope this information was helpful. Feel free to return anytime for more answers to your questions and concerns. Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. Stay curious and keep coming back to Westonci.ca for answers to all your burning questions.