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You Own 10 Put Option Contracts on JL Industrial Stock

question 18

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You own 10 put option contracts on JL Industrial stock. You paid an option premium of $.75 for a strike price of $26.25. On the option expiration date, the stock was selling for $25.15 a share. What is your percentage return?


Definitions:

Perfectly Competitive Firm

A perfectly competitive firm operates in a market where no single company can influence the price of its product, characterized by many sellers, homogeneous products, and free market entry and exit.

Horizontal Demand

A market situation where the demand curve is perfectly elastic, indicating that consumers are willing to purchase any quantity at a particular price.

Marginal Revenue

The additional income from selling one more unit of a good; sometimes equal to the price of the good.

Marginal Cost

The increase or decrease in the total cost that arises from producing one additional unit of a product or service.

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