You have purchased a put option on Kimberly Clark common stock. The option has an exercise price of $95.00 and Kimberly Clark's stock is currently trades at $96.18. The option premium is $1.25 per share.

Required:
a. Calculate your net profit on the option if Kimberly Clark's stock price falls to $93.00 and you exercise the option.
b. Calculate your net profit on the option if Kimberly Clark's stock price does not change over the life of the option.

Question

06-08-2021
Business

Answered

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You have purchased a put option on Kimberly Clark common stock. The option has an exercise price of $95.00 and Kimberly Clark's stock is currently trades at $96.18. The option premium is $1.25 per share.

Required:
a. Calculate your net profit on the option if Kimberly Clark's stock price falls to $93.00 and you exercise the option.
b. Calculate your net profit on the option if Kimberly Clark's stock price does not change over the life of the option.

Sagot :

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