Calculate the return on exercising a put option that was purchased for $10, with an exercise price of $85.The stock price at expiration is $81.
A)(60%)
B)60%
C)30%
D)(30%) Proceeds = exercise price - stock price
= 85 - 81 = $4
Profits = proceeds - original investment
= 4 - 10 = -$6

Question

Quizplus · Accepted Answer

The return is calculated as the profit divided by the original investment. The profit is -$6, and the original investment is $10, so the return is (-6/10) * 100% = -60%.

Calculate the Return on Exercising a Put Option That Was