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You Own Two Put Option Contracts on Magpie Stock with an Exercise

question 386

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You own two put option contracts on Magpie stock with an exercise price of $37.50. What is the total intrinsic value of these contracts if the stock is currently selling for $35.90 a share?


Definitions:

Price of Y

The amount of money required to purchase a specific quantity of product Y or service Y.

Consumer's Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually do pay.

Net Increase

The overall rise in a particular number after all deductions or decreases have been considered.

Units of X

A term commonly used in economics and other disciplines to denote a quantity or amount of a particular good or service referred to as "X."

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