The maximum loss a buyer of a stock put option can suffer is equal to
A) the striking price minus the stock price.
B) the stock price minus the value of the call.
C) the put premium.
D) the stock price.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The maximum loss a buyer of a stock put option can suffer is the amount paid for the put option, which is known as the put premium. This is because the buyer can choose not to exercise the option if it would result in a loss, thus forfeiting only the premium paid.

The Maximum Loss a Buyer of a Stock Put Option