# 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: