Exhibit 4.1: Managing Financial risk Example 2 Consider someone who owns 100 shares of a stock priced at $43 per share To reduce the risk of a price decline, he buys a put option with a strike(exercise) price of $40 If the price of the stock increases, he has lost the purchase price of the option(called the premium), but the stock price has increasedExhibit 4.1: Managing Financial Risk – Example 2 • Consider someone who owns 100 shares of a stock priced at $43 per share. • To reduce the risk of a price decline, he buys a put option with a strike (exercise) price of $40. – If the price of the stock increases, he has lost the purchase price of the option (called the premium), but the stock price has increased