Examples of Put Options in a sentence
The purchase of Put Options does not increase the market risk in the Mutual Fund as the risk is already in the Mutual Fund’s portfolio on account of the underlying asset position (in his example shares of XYZ Ltd.).
The purchase of Put Options does not increase the market risk in the fund as the risk is already in the fund's portfolio on account of the underlying asset position.
If there has been an adjustment to the Stock with Put Options, etc.
If the share price of Nifty falls to Rs.5,500 on expiry day, the net impact will be as follows:Premium expense = Rs.84*100* 50 Rs. 4,20,000 Option Exercised at = Rs. 5,500Profits for the Fund = (6000.00–5,500.00) * 100*50 = Rs. 25,00,000 Net Profit = Rs. 25,00,000 – Rs. 4,20,000 = Rs. 20,80,000 In the above example, the Investment Manager hedged the market risk on 5000 shares of Nifty Index by purchasing Put Options.
In the case the number of Put Option Noteholders exercising their Put Options will result in ten (10) per cent.