Profit in a Put Option
Problem
Mr. ‘A’ is bearish on the stock of ‘B’ corporation. Therefore he purchase 5 put option contracts on ‘B’ corporation for a premium of $3. The exercise price is $41 and it has a maturity period of 3 months. The current market price of the stock is $40 . If Mr. ’A’ is correct and ‘B’s price fall to $30, how much profit will he earn over 3 months period?
Solution:
Since the exercise price is $30 and the exercise price is $41, his profit is $11. As he paid $3 in premium, the net profit will be $8.
Data Science in Finance: 9-Book Bundle
Master R and Python for financial data science with our comprehensive bundle of 9 ebooks.
What's Included:
- Getting Started with R
- R Programming for Data Science
- Data Visualization with R
- Financial Time Series Analysis with R
- Quantitative Trading Strategies with R
- Derivatives with R
- Credit Risk Modelling With R
- Python for Data Science
- Machine Learning in Finance using Python
Each book includes PDFs, explanations, instructions, data files, and R code for all examples.
Get the Bundle for $29 (Regular $57)Free Guides - Getting Started with R and Python
Enter your name and email address below and we will email you the guides for R programming and Python.
