What is your total loss without this strategy

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This question may help you many years down the road! Time flies!! Imagine  you  have become 65 years old and you plan to retire next year. You expect to have $1,000,000 in your 401K. You buy 50 contracts of put options on SPY at a strike price of $2,200 per share. You paid a total premium of $25,000 for all the put options you bought. When you exercise your put option, the price of SPY per share is down by 20% and the total value of your portfolio (401k) declines by 15%.

a. Explain briefly why this strategy may make sense.

b. What is your total loss without this strategy?  $.......................

c. What is your total net loss or total net profit (your portfolio and options all together) with this strategy?

Reference no: EM131493615

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