I think a good way to describe it is a package deal containing one stock and one american sell option. So basically you value the sell option at $50, which is stupid, since the profit from exercising it can never be over $50.
EDIT: What I mean is, the absolute best possible case for the option is that the stock drops to zero. In that best case you get your money back: $50
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I think a good way to describe it is a package deal containing one stock and one american sell option. So basically you value the sell option at $50, which is stupid, since the profit from exercising it can never be over $50.
EDIT: What I mean is, the absolute best possible case for the option is that the stock drops to zero. In that best case you get your money back: $50