You buy put option contract on october gold futures

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1. Suppose you buy a put option contract on October gold futures with a strike price of $1200 per ounce. Each contract is for the delivery of 100 ounces. What happens if you exercise the option when the October futures price is $1,180?

2. What is the price of a European put option on a non-dividend-paying stock when the stock price is $100, the strike price is $100, the risk-free interest rate is 8% per annum, the volatility is 25% per annum, and the time to maturity is 1 month? (Use the Black-Scholes formula.)

Reference no: EM132018879

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