The maximum loss from buying a put option is:
A) the strike price.
B) the stock price.
C) unlimited.
D) the option price.
E) Insufficient information.

Question

Quizplus · Accepted Answer

The maximum loss from buying a put option is limited to the option price, which is the premium paid to purchase the option. This is because the buyer of the option is not obligated to exercise it; if it is not beneficial to do so, the option will simply expire worthless, resulting in a loss equal to the initial premium paid.

The Maximum Loss from Buying a Put Option Is