What is the maximum potential loss

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A stock is selling for $25. At the same time a six-month put option to sell the stock for $25 is selling for $2.

a. If the investor purchases BOTH the stock AND the put (i.e., construct a protective put), what is the net dollar profit or loss if the price ends at $0, $15, $25, $50, or $500 at maturity?

b. What is the maximum potential loss from this protective put?

c. What is the maximum potential gain from this protective put?

d. What is the break-even stock price?

Reference no: EM132499706

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