For the purchaser of a put option, the option will normally be exercised for profit if the difference between the strike price and the value of the underlying futures contract or security exceeds the sum of the option premium, taxes and transactions costs.

Question

Quizplus · Accepted Answer

The profit for a put option purchaser occurs when the market price of the underlying asset falls below the strike price enough to cover the cost of the option premium, taxes, and transaction costs. This difference allows the purchaser to sell the asset at a higher strike price than the current market price, realizing a profit after expenses.

For the Purchaser of a Put Option, the Option Will