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A customer sells 1 ABC Jul 40 Put at $6 when the market price of ABC is $38. The market falls to $25 and the customer is assigned. The customer then sells the stock in the market. The loss is:

Respuesta :

ebrightosagie

Answer: 9 points or $900

Explanation:

Given:

Market price = $38.

Fall = $25.

Premium = $6.

When exercised, the customer must buy the stock for $40. But he goes ahead to sell the stock at $25 for a 15 point loss. Hence since 6 points was collected as the premium, the net loss is 9 points or $900. This means the customers loss is $900.

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