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Omar, a Junior Trader, is analyzing the derivatives market for large-cap tech stocks and is focused on setting up a bearish (decline-anticipating) position on Microsoft Corporation (MSFT). He is reviewing the current exchange-listed options quotes for his final training assessment.
Expiry | Strike | Call Last | Put Last |
|---|---|---|---|
28/06/2025 | $425 | $8.98 | $5.63 |
Assumptions:
Each option contract represents 100 shares of the underlying stock.
Transaction costs and bid-ask spreads are ignored for simplification.
Question:
As part of a directional strategy anticipating a decline in Microsoft's stock price, how much total capital would Omar need to allocate to purchase 4 put option contract at the quoted strike price?
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