You purchase 50 of Google March put contract for a premium of $5, and strike price of 100

Finance Dec 22, 2020

You purchase 50 of Google March put contract for a premium of $5, and strike price of 100. What is the maximum profit that you could gain from this strategy?

Group of answer choices

A. We need to have the stock price

B. $5,000

C. $19,400

D. $4,750

Expert Solution

Total premium = 50 * 5 = $250

Total profit = 50 * 100 = $5000

Maximum profit = Total profit - premium

Maximum profit = $5000 - $250

Maximum profit = $4,750

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