Calculate your percentage return on the put option


Problem:

Suppose you have $60,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $30 per share. You notice that a put option with a $30 strike is also available with a premium of $6.

Question: Calculate your percentage return on the put option for the six-month holding period if the stock price declines to $20 per share. Please provide all computation and formulas.

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Finance Basics: Calculate your percentage return on the put option
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