Stock price is going to decline from its current level

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Reference no: EM13932616

Suppose you believe that Delva Corporation's stock price is going to decline from its current level of $82.50 sometime during the next 5 months. For $510.25 you could buy a 5-month put option giving you the right to sell 100 shares at a price of $85 per share. If you bought this option for $510.25 and Delva's stock price actually dropped to $60, what would your pre-tax net profit be?

a. $1,989.75

b. $2,193.70

c. -$510.25

d. $2,303.38

e. $2,089.24

Reference no: EM13932616

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