What options does the put buyer have on the expiration date of the contract? Multiple select question. She can exercise the put option. She has an obligation to exercise the put on the expiration date. She can let the put expire. She can negotiate to extend the expiration date.
Added by Angela E.
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A put option buyer has the right, but not the obligation, to sell the underlying asset at the strike price on or before the expiration date. Show more…
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A put option in finance allows you to sell a share of stock at a given price in the future. There are different types of put options. A European put option allows you to sell a share of stock at a given price, called the exercise price, at a particular point in time after the purchase of the option. For example, suppose you purchase a six-month European put option for a share of stock with an exercise price of $26. If six months later, the stock price per share is $26 or more, the option has no value. If in six months the stock price is lower than $26 per share, then you can purchase the stock and immediately sell it at the higher exercise price of $26. If the price per share in six months is $22.50, you can purchase a share of the stock for $22.50 and then use the put option to immediately sell the share for $26. Your profit would be the difference, $26 - $22.50 = $3.50 per share, less the cost of the option. If you paid $1.00 per put option, then your profit would be $3.50 - $1.00 = $2.50 per share. The point of purchasing a European option is to limit the risk of a decrease in the per-share price of the stock. Suppose you purchased 200 shares of the stock at $28 per share and 80 six-month European put options with an exercise price of $26. Each put option costs $1. (a) Using data tables, construct a model that shows the value of the portfolio with options and without options for a share price in six months between $20 and $29 per share in increments of $1.00. What is the benefit of the put options on the portfolio value for the different share prices? For subtractive or negative numbers, use a minus sign even if there is a + sign before the blank. (Example: -300. If your answer is zero, enter "0". Share Price Benefit of Options $20 $21 $22 $23 $24 $25 $26 $27 $28 $29 (b) Discuss the value of the portfolio with and without the European put options. The lower the stock price, the more beneficial the put options. The options are worth nothing at a stock price of $ or higher. There is a benefit from the put options to the overall portfolio for stock prices of $ or lower.
Madhur L.
Danielle F.
Which of the following is not true regarding options? a. The writer of a call option has the obligation to sell the currency to the buyer if the option if exercised. b. The buyer of a put option has the right to sell the currency at the strike price. c. The writer of a put option has the obligation to sell the currency to the buyer if the option is exercised. d. The buyer of a call option has the right to buy the currency at the strike price
Akash M.
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