In Problem 14, suppose Target stock sells for $200 per share immediately before your options’ expiration. What is the rate of return on your investment? What is your rate of return if the stock sells for $220 per share (think about it)? Assume your holding period for this investment is exactly three months.

Problem 14

If you wanted to purchase the right to sell 2,000 shares of Target stock in March 2022 at a strike price of $210 per share, how much would this cost you?