SIDC Module 12 Options, futures and swaps question: put with a strike of RM4.00 for RM0.25

SIDC Module 12Options, futures and swaps

An investor buys a put with a strike of RM4.00 for RM0.25. At expiry the share is RM3.40. What is the profit per share?

A RM0.25
B RM0.35
C RM0.60
D RM0.85

Show the answer and explanation

Answer: B. RM0.35

A put's payoff is max(K − S, 0) = 4.00 − 3.40 = RM0.60; profit = 0.60 − 0.25 = RM0.35. RM0.60 ignores the premium. RM0.85 adds the premium. RM0.25 is the premium, which would be the loss had the share closed at or above RM4.00. Source: SIDC Module 12 Study Outline (Jul-Dec 2026) Section 7 (Topics 13 Options, 14 Futures, 15 Swaps and Interest Rate Options); J. C. Hull, Options, Futures, and Other Derivatives (as at October 2026).

Common mistake

Leaving out the premium paid.

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Related SIDC Module 12 questions

An investor writes (sells) a call with a strike of RM2.50 for a premium of RM0.20. At what share price at expiry does the writer break even?A share trades at RM10.00. A one-year European call with a strike of RM10.00 costs RM1.20, and the one-year risk-free rate is 5% (annual compounding). By put-call parity, what should a one-year European put with the same strike cost?An investor buys a call with a strike of RM5.00 for a premium of RM0.30. At expiry the share is RM5.80. What is the profit per share?

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Original study material mapped to the public SIDC Module 12 syllabus. Unofficial, not endorsed by SIDC or the SC. Verify figures and rules against current guidance before relying on them.