Jenny purchased 2 put option contracts on Winslow Mfg. stock. The option premium was $.80 and the strike price was $37.50. On the expiration date, the stock was selling for $38.00 a share. What is the total payoff on the option contracts?
A)−$100
B)−$50
C)$0
D)$50
E)$150

Question

Quizplus · Accepted Answer

Since the stock price ($38.00) is higher than the strike price ($37.50), the put options are out of the money and will not be exercised. Therefore, the total payoff is $0 because the options expire worthless.

Jenny Purchased 2 Put Option Contracts on Winslow Mfg