The 700 strike price Option will be worth 0 in 95 days if AAPL price is above 700 on the day of expiry. All stocks, ETFs, commodities, Indices and other securities mentioned in our courses are for educational and illustrative purposes only.
The Cadillac Put Option would be worth $260, so your net gain would be $34 (260 – 200 -26).
The Ferrari Put option will make a profit much before and much more than the Cadillac Option, which will make much more than the Kia Option.
Similarly, the Cadillac Option at 660 will be worthless if AAPL price is above 660 on the day of expiry.
You pick your protection timeframe shown in Figure I (The number in brackets is the number of days until this Put Option expires). This is just like buying car insurance for a year, but you did not have an accident or claim of any sort, so your Option (insurance policy) expired worthless.
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