Question: Suppose you write a put contract with a strike price of $40 and an expiration date in 3 months. The current stock price is $41

Suppose you write a put contract with a strike price of $40 and an expiration date in 3 months. The current stock price is $41 and the contract is on 100 shares. What have you committed yourself to? How much could you gain or lose? The put option price is $5.

Note: writing a put contract means selling a put option to another party.

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