Assume you bought a put on a stock selling for $60, with a strike price of $55 for a $5 premium. what would be your maximum gain? a) 50 b) 55 c) 60 d) 65 A put with a strike price of $75 sells for $10. which of the following statements is least accurate? The greatest: a) profit the writer of the put option can make is $10 b) profit the buyer of a put option can make is $65 c.) loss the writer of a put option can have is $75 Loss to the buyer of a put is $10 Which of the following combinations of options and underlying investments have similarly shaped profit/loss diagrams? A: a) covered call and protective put b) covered call, and a short stock combined with a long call c) short put option combined with a long call option, and a protective put d) long call option combined with a short put option, and a long stock position
A C Not sure about the 3rd one
a c d
For first 1. the question is real twisted. you dont have any gain, until stock falls below 50, only then you start gaining… and the most it can fall is 0 so the most you gain is 50. C (this one tricky too, but common sense prevails) haven’t done this part.