Question

Strike Calls Puts Close Price Expiration Vol. Last Vol. Last Hendreeks 103 100 Feb 72 5.20 50 2.40 103 100 Mar 41 8.40 29 4.90 103 100 Apr 16 10.68 10 6.60 103 100 Jul 8 14.30 2 10.10 Suppose you buy 60 April 100 put option contracts. What is your maximum gain? On the expiration date, Hendreeks is selling for $86.25 per share. How much is your options investment worth? What is your net gain? (Do not round intermediate calculations.)

Answer 1

Hi, you've asked an unclear question not properly formatted.

First, you may wonder, what is a put option? In simple words, a put option is a type of contract that gives one party (the buyer of the "put") the right, but not the obligation, to sell the underlying stock at a "strike price" by the specified date in the future.

However, let's work on this clear assumption that the put option was bought for a strike price of $86, and the current price of the stock is $90, if the price of the stock drops to $79 on the expiration date and the option is exercised, then you would have netted in some gains which can be calculated by subtracting:

$86-$79= $7 net gain per share.

With this assumption, you may apply the same method to determine the solution to the completed question at your disposal.