Suppose you own a put option that gives you the right to sell 200 shares of MMM
Question:
Suppose you own a put option that gives you the right to sell 200 shares of MMM Construction to another investor for $25 per share anytime during the next six months. MMM’s stock currently sells for $26 per share.
a. Should you exercise the option and sell the stock to the option writer (seller) if the stock price stays at $26 per share?
b. Should you exercise the option if the stock’s price increases to $30? What would be your gain (loss) if you bought the stock at $30 and then exercised the option?
c. Should you exercise the option if the stock’s price decreases to $20? What would be your gain (loss) if you bought the stock at $20 and then exercised the option?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
a If the stock is purchased for 26 per share and sol...View the full answer
Answered By
Charles mwangi
I am a postgraduate in chemistry (Industrial chemistry with management),with writing experience for more than 3 years.I have specialized in content development,questions,term papers and assignments.Majoring in chemistry,information science,management,human resource management,accounting,business law,marketing,psychology,excl expert ,education and engineering.I have tutored in other different platforms where my DNA includes three key aspects i.e,quality papers,timely and free from any academic malpractices.I frequently engage clients in each and every step to ensure quality service delivery.This is to ensure sustainability of the tutoring aspects as well as the credibility of the platform.
2+ Reviews
10+ Question Solved
Related Book For 
Question Posted:
