The maximum possible payoff to the owner of a put options is:
A) the stock price.
B) the exercise price minus the stock price.
C) the option's exercise price.
D) there is no maximum.

Question

Quizplus · Accepted Answer

The maximum possible payoff to the owner of a put option is the difference between the exercise price and the stock price, and this occurs when the stock price is below the exercise price at expiration. Therefore, the maximum possible payoff to the owner of a put option is the option's exercise price.

The Maximum Possible Payoff to the Owner of a Put