A speculator sells a put option with a strike of $35 for $2.58. The stock is cur

Question

A speculator sells a put option with a strike of $35 for $2.58. The stock is currently priced at $37.39 and moves to $33.1 on the expiration date. The buyer will exercise the option on the expiration date (if it is feasible to do so). What is the speculator's (i.e., the call seller's) profit or loss per share? (Do not ignore the premium collected.)

A speculator sells a call option with a strike of $25 for $0.67. The stock is currently priced at $22.32 and moves to $26.46 on the expiration date. The buyer will exercise the option on the expiration date (if it is feasible to do so). What is the speculator's (i.e., the call seller's) profit or loss per share? (Do not ignore the premium collected.)

Explanation / Answer

1. Profit/loss to the speculator for put option=-max(strike-spot expiry,0)+premium received=-max(35-33.1,0)+2.58=0.68

2. Profit/loss to the speculator for call option=-max(spot expiry-strike,0)+premium received=-max(26.46-25,0)+0.67=-0.79

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