Calculate the net profit realised from the share and option

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Reference no: EM131935715

You own 100 shares originally purchased for $34.82 per share. After receiving advice that there is a chance that the share price may fall greatly, you entered into a protective put position by purchasing put options on the shares. The put options were purchased for $2.80 each, with a strike price of $36.00. You need to sell the shares at maturity to raise capital for another investment. The market price of the share at the maturity of the option was $42.29.

a) Calculate the net profit realised from the share and option holding at maturity. Give your answer in dollars to the nearest dollar.

Net profit realised = $ ?

b) Calculate the net profit realised had the put options not been bought. Give your answer in dollars to the nearest dollar.

Net profit realised without put options = $ ?

Reference no: EM131935715

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