You have purchased a put option on Samsung Inc, common stock. The option has an exercise price of RM70 and Samsun Inc.'s stock currently trades at RM71.18. The option premium is RM1 29 per contract One option equals 100 shares of the underlying stock. a) Calculate your net profitiloss on the option if Samsung Inc. 's stock price falls to RM68 and you exercise the option.
b) Calculate your net profit/loss on the option if Samsung In's stock price does not change over the life of the option. Should you exercise the option? Why? c) Should you exercise the option if the Samsung Inc,'s stock price falls to RM69.00. Why? Explain your answer.