You sold a put contract on EDF stock at an option price of $.40. The option had an exercise price of$20 .The option was exercised. Today, EDF stock is selling for $19 a share. What is your total proﬁt or loss on all of your transactions related to EDF stock assuming that you close out your positions in
This stock today? Ignore transaction costs and taxes.
A) -$140
B) -$60
C) $40
D) $60
E) $140

Question

Quizplus · Accepted Answer

You received $0.40 per share for selling the put, but you had to buy the stock at $20 when the option was exercised. Selling the stock at $19 results in a $1 loss per share. The net loss is $1 - $0.40 = $0.60 per share. For 100 shares, the total loss is $60.

You Sold a Put Contract on EDF Stock at an Option