On March 1, 2025, Ferguson Corp. purchased a put option on shares of SST stock....
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On March 1, 2025, Ferguson Corp. purchased a put option on shares of SST stock. The contract was for 100 shares at a strike price of $90 per share, with an expiration date of May 31, 2025. Ferguson settled the option on May 5 (assume cash settlement). Additional information pertaining to the option is provided below. March 1 March 31 May 5 Price of SST stock: $90 $80 $85 Time value of option: $50 $40 $30 Required: 1. Compute the cost of the option paid by Ferguson Corp. on March 1, 2025. 2. Compute the balance of the option account on date of settlement
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