You have purchased a put option on Kimberly Clark common stock. The option has an exercise price of $83 and Kimberly Clark’s stock currently trades at $84.18. The option premium is $1.50 per contract. Assume that 100 shares are traded.
a. Calculate your net profit on the option if Kimberly Clark’s stock price falls to $81 and you exercise the option. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations.)
Net profit $
b. Calculate your net profit on the option if Kimberly Clark’s stock price does not change over the life of the option. (Negative amount should be indicated by a minus sign.)
Net profit $