A trader buys 20 February ABC 95 Puts at 4.50 when ABC is at 100. Upon expiration, the stock is at 97.50, the Puts are not sold, and the options expire. What is the profit or loss for the trader?

Explanations

The Puts are Out Of The Money at expiration and expire worthless. The break-even price on this trade for the trader is 90.50. 95 (Put Strike Price) Minus Premium Paid 4.50. The stock must be below $90.50 on expiration day to earn a profit. He paid $450 20 times = $9,000. It is a $9,000 loss