Charlie bought seven put option contracts on a stock at an option price of $3.25. The stock's share price is currently $39.42. The options have a strike price of $38. Use the commission schedule in the text/from the notes.

 

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Charlie bought seven put option contracts on a stock at an option price of $3.25. The stock's share price is currently $39.42. The options have a strike price of $38. Use the commission schedule in the text/from the notes. (a) What are the minimum and maximum commissions allowable for the option contract purchases? [2 points] (b) What is the total commission owed on the purchase of the put options? Be sure to include the trade value. [2 points] (c) Assume the share price moves to $32.90 per share and Charles elects to exercise the put options. How much will be owed in commission? Be sure to include the trade value. [2 points] (d) Suppose the commission on the stock transaction is 0.5%, what is the total net profit from this strategy? Be sure to include the trade value and any relevant commission calculations. [3 points]

• Expert Answer

a The minimum commission allowable for the option contract purchases is 10 50 and the maximum commis View the full answer