Question: Yates Co. purchased a put option on Dixon common shares on January 7, 2013, for $215. The put option is for 300 shares, and the strike price is $51. The option expires on July 31, 2013. The following data are available with respect to the put option:
Date Market Price of Dixon Shares Time Value of Put Option
March 31, 2013 $48 per share $120
June 30, 2013 $50 per share 54
July 6, 2013 $46 per share 16
March 31, Yates prepares financial statements. What amount of unrealized gain or loss would Yates report on its March 31 income statement? a. 95. b. 805. c. 900. d. 995.
July 6, Yates settles the put option on the Dixon shares. What would be the gain or loss on the settlement?