Berkshire Holdings stock is selling for $59 a share, the $59 puts are priced at $0

Finance Nov 13, 2020

Berkshire Holdings stock is selling for $59 a share, the $59 puts are priced at $0.68, and the $59 calls are priced at $.95. How much will you receive if you write eight $59 put option contracts and eight $59 call option contracts?

Expert Solution

Writing an option means selling an option so one receives the premium

Contract size of options=100

Amount received=Number of contracts*Contract size*Premium per share=8*100*0.68+8*100*0.95
=1304

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