A put option on yen is written with a strike price of ¥105.00/$. Which spot price maximizes your profit if you choose to exercise the option before maturity?
A) ¥100/$
B) ¥105/$
C) ¥110/$
D) ¥115/$

Question

Quizplus · Accepted Answer

A put option gives the holder the right to sell the underlying asset at the strike price. The profit is maximized when the spot price is lower than the strike price. Therefore, the lower the spot price, the higher the profit. Hence, ¥115/$ maximizes the profit.

A Put Option on Yen Is Written with a Strike