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You have sold a put on a stock at a strike of EUR 46 for a premium of EUR 2.80. What is your maximum profit on this deal?
Suggested Answer: D
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33 comments · newest first
AN
Antione
11 months ago
Just the premium, EUR 2.80 is correct!
PE
Peggie
11 months ago
I thought it depended on the stock's performance...
IS
Isaiah
11 months ago
Wait, isn't it also about the strike price?
BE
Benedict
12 months ago
Totally agree, it's just the premium.
CO
Corrina
1 year ago
Maximum profit is the premium received, so EUR 2.80!
LI
Lindsay
1 year ago
I’m leaning towards EUR 2.80 as the answer, but I guess it could depend on how the stock performs. I just hope I remember the details correctly!
LI
Lindsey
1 year ago
I feel like I saw a similar question where the profit was calculated differently. Is it possible that the maximum profit could be more than just the premium?
GL
Glenna
1 year ago
I'm not entirely sure, but I remember something about how the maximum profit is capped at the premium when the stock price stays above the strike price.
XU
Xuan
1 year ago
I think the maximum profit for selling a put is just the premium received, which is EUR 2.80, right?
GA
Gayla
1 year ago
I'm not totally confident on this, but I believe the maximum profit is the strike price minus the premium, which is EUR 43.20.
BR
Bronwyn
1 year ago
Okay, let me see... The maximum profit would be the premium received, which is EUR 2.80, right?
LA
Lai
1 year ago
Hmm, I'm a bit unsure about this one. I need to think through the put option mechanics carefully.
GI
Gilma
1 year ago
This looks like a straightforward options question. I think I can solve this one.
CA
Carey
2 years ago
Ah, the old put-selling gambit. Just be careful, amigo, or you might end up with a stock you don't want at a price you don't like. But hey, if you're feeling lucky, go for it!
RO
Roxane
2 years ago
I dunno, it seems like the market could always surprise you. I'm going with A - can't say for sure until we see what the stock does.
SA
Santos
2 years ago
User 3: I agree, it's hard to determine the maximum profit until the stock price changes.
ED
Edna
2 years ago
Yeah, you're right. The market can be unpredictable.
VE
Veronika
2 years ago
I think it's A) Cannot say - it depends on market movements.
CA
Carissa
2 years ago
This one's a cinch! The maximum profit is the premium you collected, which is EUR 2.80. Simple as that.
SH
Shoshana
2 years ago
Option D sounds right to me. The premium you received is your maximum profit, no matter what happens to the stock price. Easy money!
LI
Linette
2 years ago
Exactly, selling a put option can be a good way to generate income if you don't mind potentially buying the stock at the strike price.
WA
Wayne
2 years ago
So, even if the stock price drops below the strike price, your profit is still capped at EUR 2.80.
WI
William
2 years ago
Yes, that's correct. The maximum profit is the premium you received, which is EUR 2.80.
YA
Yasuko
2 years ago
Option D sounds right to me. The premium you received is your maximum profit, no matter what happens to the stock price. Easy money!
LA
Lauran
2 years ago
I'm not sure, but I think the maximum profit depends on market movements, so it could vary.
AN
Antonio
2 years ago
I agree with Brinda, the maximum profit is EUR 2.80 because that's the premium received.
SH
Sherita
2 years ago
Hmm, I think the correct answer is C. EUR 43.20. You sold the put at 46, and the premium was 2.80, so your max profit is the difference between those two, which is 43.20.
BR
Brinda
2 years ago
I think the maximum profit is EUR 2.80.
RO
Roxane
2 years ago
Well, if the stock price falls below 46 euros, I'd say the maximum profit is 2.80 euros. That's a pretty sweet deal, if you ask me.
GL
Glennis
2 years ago
D) EUR 2.80
RA
Rachael
2 years ago
C) EUR 43.20
CO
Cordelia
2 years ago
B) EUR 46.00
MA
Marquetta
2 years ago
A) Cannot say - it depends on market movements