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The sale of the 100 shares of stock at a strike price of $50 to Trader B = $5,000 (P). The purchase of 100 shares of stock at $40 = $4,000 (Q). The put option premium paid to Trader B for buying the contract of 100 shares at $5 per share, excluding commissions = $500 (R)). Thus S = (P − Q) − R = ($5,000 − $4,000) − $500 = $500
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