Products & RisksPregunta 31 de 125
An investor buys 1 XYZ put with a 40 strike for a premium of 2. What is the maximum gain on this long put?
a.Unlimited
b.$200
c.$3,800
d.$4,000
Explicación
A long put profits as the stock falls, but the stock can fall no lower than zero. Maximum gain equals the strike minus the premium, times 100: (40 - 2) x 100 = $3,800, achieved if the stock goes to zero and the holder buys at market and exercises the put to sell at 40.
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