1. An equity has a price of $21.57 per share, and Mr. Smith sold to...
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1. An equity has a price of $21.57 per share, and Mr. Smith sold to open a 20-strike put for $1.05. If the put is exercised, what happens? a. Nothing, because the put has no value. b. Mr. Smith sells the equity at $20 per share and gains $1.05 of option premium; Mr. Smith receives $2,001.05. c. Mr. Smith buys the stock at $20 per share and receives $1.05 of option premium; Mr. Smith pays $1,998.95. d. Mr. Smith buys the stock at $20 per share and receives $1.05 per share of option premium; Mr. Smith pays a net amount of $1,895 for the stock.
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