You sold ten put option contracts on PLT with an exercise price of €32.50 and an option price of €1.10.Today, the option expires and the underlying share is selling for €34.30 a share.Ignoring
Trading costs and taxes, what is your total proﬁt or loss onthis investment?

Question

Quizplus · Accepted Answer

The seller of a put option receives the option price as premium and incurs the obligation to purchase the underlying asset at the exercise price if the option is exercised. 
In this case, you sold 10 put option contracts at €1.10 per contract, for a total premium of €1.10 x 10 x 100 = €1,100. 
Since the option expired and the underlying shares are selling for €34.30, which is above the exercise price of €32.50, the option was not exercised and you do not have to buy the shares. 
Therefore, your total profit is the premium received of €1,100. 
Hence, the correct choice is D).

You Sold Ten Put Option Contracts on PLT with an Exercise