You have purchased a put option on Kimberly Clark common stock. The option has an exercise price of $ 95.00 and Kimberly Clark’s stock currently trades at $ 96.18. The option premium is $ 1.25 per contract.
a. Calculate your net profit on the option if Kimberly Clark’s stock price falls to $ 93.00 and you exercise the option.
b. Calculate your net profit on the option if Kimberly Clark’s stock price does not change over the life of the option.