What will be net profit if the price of intel crashes

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Suppose the stock of Intel is trading at $50. A put option contract with a strike price of $55 expiring in a month's time is being priced at $2.50. You believe that Intel stock will fall sharply in the coming weeks and so you paid $250 to purchase a single Intel put option covering 100 shares.

Problem a. What will be your net profit if the price of Intel crashes to $40 at expiration date?

Problem b. What will be your net profit if the price of Intel rallies to $60 at expiration date?

Reference no: EM132745898

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