Alan just purchased 100 shares of Global, Inc. (GLO) worth $45 each and to protect his investment he purchased a three-month put option with a strike price of $45 for a cost of $400. One of two scenarios is expected to occur within three months: 

(a) GLO stock declines in value to $33 and 

(b) GLO stock is valued at $61. 

Calculate the gain or loss under each scenario and explain how the hedge has provided protection for Alan's position in GLO shares. Ignore transaction costs.

Answer rating: 100% (QA)

Let s calculate the gain or loss for each scenario and explain how the hedge has provided protection for Alan s position in GLO shares Scenario a GLO View the full answer