Question: Hi I need help with working out the following: Ted buys 40 PUT option contracts. Each contract consists of 100 shares. Exercise price $4.50 per

Hi I need help with working out the following:

Ted buys 40 PUT option contracts. Each contract consists of 100 shares.

Exercise price $4.50 per share; premium $0.80; spot price at expiry $7.00.

How much does it cost to purchase the 40 contracts? (ignoring brokerage costs)

How much will Ted receive if the option is exercised?

How much will Ted receive if he sells the underlying shares directly in the market?

Should Ted exercise his option?

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