The payoff to the holder of a put option is given by:
A)P = max(K - S,0).
B)P= max(S - K,0).
C)P = min(S - K,0).
D)P = max(K,0).

Name: The payoff to the holder of a put option is given by: A)P = max(K - S,0). B)P= max(S - K,0). C)P = min(S - K,0). D)P = max(K,0).
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Question

Quizplus · Accepted Answer

The payoff for a put option is the maximum of either the strike price minus the stock price or zero, which is represented by max(K - S, 0).

The Payoff to the Holder of a Put Option Is