What is the fundamental value of a put contract with a strike price of $25 when the option price is $150 and the underlying common stock sells for $26?
A) $150
B) $100
C) $0.00
D) -$100

Question

Quizplus · Accepted Answer

The fundamental value of a put contract is determined by the difference between the strike price and the current price of the underlying asset, but only when this difference is positive. Since the stock sells for $26, which is above the strike price of $25, the intrinsic value of the put option is $0.00 because the option holder would not exercise the option to sell at $25 when they could sell at the higher market price of $26.

What Is the Fundamental Value of a Put Contract with a Strike