Module 1 lesson 4

Question 1

What does a put option allow?

Answer 1

Gives the buyer of the put option the right to
SELL the underlying stock at the strike price,
anytime on or before the expiry date.

Question 2

How do you calculate the P&L for a long put option?

Answer 2

(Strike Price - Market Price of Underlying - Option Premium) x 100

Question 3

How do you calculate the P&O for a short put option?

Answer 3

(Market price of Underlying - Strike Price + Option Premium x 100)

Question 4

Selling a PUT Option equals?

Answer 4

Limited upside and Limited Downside.