What is the maximum profit with a 128.00 put option expiring 8/16 of August limit price of 2.65 with the stock price currently at 125.98 if the stock falls below a price of $122.90 by expiration


Aime
The maximum profit from a 128.00 put option expiring on August 16th with a limit price of $2.65 and a stock price currently at $125.98, assuming the stock falls below a price of $122.90 by expiration, can be calculated as follows:
- Profit Calculation: The put option gives the holder the right to sell the stock at the strike price of $128.00. If the stock price falls below the strike price, the option will be exercised, and the holder will profit from the difference between the strike price and the actual stock price. In this scenario, the maximum profit would be the difference between the strike price and the lowest stock price ($122.90) that the option could potentially be exercised at, which is $128.00 - $122.90 = $5.10.
- Current Price Consideration: The stock price is currently at $125.98, which is above the strike price of $128.00. However, the scenario assumes that the stock will fall below the strike price by expiration. If the stock price does not reach this threshold, the option will expire worthless, and no profit will be realized.
- Expiration Consideration: It's important to note that the scenario assumes the stock price will fall below $122.90 by expiration. If this does not occur, the option will expire worthless, and no profit will be realized.
In conclusion, the maximum profit from the 128.00 put option expiring on August 16th with a limit price of $2.65 and a stock price currently at $125.98, assuming the stock falls below a price of $122.90 by expiration, is $5.10. However, actual profits will depend on the actual stock price at expiration, and the option will only be profitable if the stock price falls below the strike price.
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