You have purchased a put option on Pfizer common stock. The option has an exercise price of $41 and Pfizer’s stock currently trades at $43. The option premium is $0.80 per contract.
a. What is your net profit on the option if Pfizer’s stock price does not change over the life of the option? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))
Net profit $ per share
b. What is your net profit on the option if Pfizer’s stock price falls to $35 and you exercise the option? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))
Net profit $ per share