Determine te net gain if we decide to offset put position, Financial Accounting

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Determine te net gain if we decide to offset put position

Problem

Spot price of Amazon is $2200. We are looking to use 3 month put options to hedge against falling prices given the recent pullback in tech stocks. Given the strike price of the put options is $2150 for a premium of $50 for a contract of 100 shares. Prices fall to $2000 between now and maturity, and the premium rises to $55. Determine the net gain/loss if we decide to offset the put option position and simultaneously sell the stock.

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Financial Accounting: Determine te net gain if we decide to offset put position

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Financial Accounting: Determine te net gain if we decide to offset put position

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