Calculate the gain or loss for both the investor

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Question: Assume that the market price of XY Company on March 20th is 100 $ and the investor expects that the price of this stock will decline in May 20th . So he decide to sell a PUT option for this stock with premium 4 $. and the exercise price 100 $ (the same as the market price)

1) Calculate the gain or loss for both the investor (Buyer) and the option writer with following scenarios (the price of the XY company on May will be 40- 45- 50- 96- 100 -104- 110 -120).

2) Draw the relationship between the gain or loss for both the investor and the option writer and the stock price during May 20th ?

Reference no: EM133633277

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