Purdues net gain or loss after accounting for premium paid

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Reference no: EM131230699

Put Options on Futures Purdue Savings and Loan Association purchased a put option on Treasury bond futures with a September delivery date and an exercise price of 91-16. The put option has a premium of 1-32.

Assume that the price of the Treasury bond futures decreases to 88-16. Should Purdue exercise the option or let it expire? What is Purdue's net gain or loss after accounting for the premium paid on the option?

Reference no: EM131230699

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