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Suppose you buy 50 February 100 put option contracts. What is your maximum gain? On the expiration date, Hendreeks is selling for $87.45 per share. How much is your options investment worth? What is your net gain?

User IzumiSy
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1 Answer

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Final answer:

The maximum gain for buying 50 February 100 put option contracts would be $6,275. The options investment would be worth $6,275 if Hendreeks is selling for $87.45 per share on the expiration date. The net gain can only be calculated if the initial investment is provided.

Step-by-step explanation:

To calculate the maximum gain, we need to subtract the strike price from the stock price and multiply it by the number of contracts and the multiplier of 100 (since each contract represents 100 shares). In this case, the strike price is $100 and the stock price is $87.45:



Maximum Gain = (Strike Price - Stock Price) x Number of Contracts x Multiplier



Maximum Gain = ($100 - $87.45) x 50 x 100 = $6,275



To determine the value of your options investment, we need to calculate the difference between the strike price and the stock price and multiply it by the number of contracts and the multiplier:



Options Investment Worth = (Strike Price - Stock Price) x Number of Contracts x Multiplier



Options Investment Worth = ($100 - $87.45) x 50 x 100 = $6,275



The net gain is calculated by subtracting the initial investment (the cost of buying the options contracts) from the investment worth:



Net Gain = Options Investment Worth - Initial Investment



Since the initial investment is not provided in the question, we cannot calculate the net gain without that information.

User CyberJunkie
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