You have purchased a put option on Pfizer common stock. The option has an exercise price of $51 and Pfizer’s stock currently trades at $53. The option premium is $0.60 per contract. SHOW WORK PLEASE
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 $48 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