Problem:
Suppose you have $50,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $20 per share. You notice that a put option with a $20 strike is available with a premium of $2.5.
Required:
Calculate your percentage return on the put option for the six-month holding period if the stock price declines to $16 per share. Elucidate in detail and specify all computation and methods.