Answer:
$6,600
Explanation:
The payoff arise from put option is max (K - S, 0) - P
Now it would be maximum at S = 0
And, the maximum payoff is
K - 0 - P
= K - P
= 77 - 4
= $66
We assume that for each and every contract the number of shares is 00
So, the maximum profit gained from this strategy is
= $66 × 100 shares
= $6,600
We simply multiplied $66 by the number of shares so that the maximum profit gained could come and the same is to be considered
