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Business, 02.11.2020 17:00 michelleperezmp58

A stock is trading at $59. You believe there is a 80% chance the price of the stock will increase by 15% over the next 3 months. You believe there is a 5% chance the stock will drop by 5%, and you think there is only a 15% chance of a major drop in price of 30%. At-the-money 3-month puts are available at a cost of $740 per contract. What is the expected dollar profit for a writer of a naked put at the end of 3 months?

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