Which one of the following correctly defines the range of time values for an American put option?
A)$0 to +$1
B)−$1 to +$1
C)≤ $0
D)≥ $0
E)= $0

Question

Quizplus · Accepted Answer

An American put option gives the holder the right to sell an asset at a specified price before or on the expiration date. The value of this option can never be less than $0, as the worst-case scenario is that the option is not exercised, leading to a value of $0. It cannot have a negative value because the holder would simply choose not to exercise the option, avoiding any loss beyond the premium paid for it.

Which One of the Following Correctly Defines the Range of Time