Final answer:
The maximum possible profit for purchasing three Microsoft December $145 put contracts at a premium of $8.10, when each contract covers 100 shares, is $41,070, assuming the stock price drops to $0 before expiration.
Step-by-step explanation:
You purchased three Microsoft December $145 put contracts for a premium of $8.10. To determine your maximum possible profit, you need to understand how put options work. A put option gives you the right, but not the obligation, to sell a stock at a predetermined price (strike price) within a certain time frame.
Since each contract covers 100 shares, you effectively have the right to sell 300 shares at $145 each. The premium paid is the cost to purchase this option. If the stock price goes to $0 (which is the best-case scenario for a put holder, albeit highly unlikely), the strike price of $145 per share is what you'd be able to sell your shares for. Multiplying 300 shares by $145 gives you $43,500.
Since you paid a premium of $8.10 per share for a total of 300 shares, your total premium cost is $2,430 (300 shares * $8.10). So, the maximum possible profit would be the total value if the stock went to $0 minus the cost of the premiums.
Maximum profit = (Strike Price * Number of shares) - (Premium * Number of shares)
Maximum profit = ($145 * 300) - ($8.10 * 300)
Maximum profit = $43,500 - $2,430 = $41,070