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You sold a put contract on EDF stock at an option price of $.25 and an exercise price of $22.50. The option expires today when EDF stock is selling for $21.70 a share. Ignoring transaction costs and taxes,
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You sold a put contract on EDF stock at an option price of $.25 and an exercise price of $22.50. The option expires today when EDF stock is selling for $21.70 a share. Ignoring transaction costs and taxes, what is your total profit on this investment?

User Tiddo
by
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1 Answer

4 votes

Answer:

-$0.55

Step-by-step explanation:

The computation of the total profit on this investment is shown below:

Profit on investment = Premium received - (Exercise price - Market price)

= $0.25 - ($22.50 - $21.70)

= $0.25 - $0.80

= ($0.55)

Since as we can see that the per share value is negative so it would be loss on investment nor the profit on investment

We simply applied the above formula to find out the profit on investment

User Wkzhu
by
3.5k points
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