Calculate the Return on Exercising a Put Option That Was

question 111

Multiple Choice

Calculate the return on exercising a put option that was purchased for $10, with an exercise price of $85.The stock price at expiration is $81.

• A)(60%)
• B)60%
• C)30%
• D)(30%) Proceeds = exercise price - stock price
• = 85 - 81 = $4
• Profits = proceeds - original investment
• = 4 - 10 = -$6

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