Tim purchased 3 put option contracts on Western Fields stock. The strike price was $35 and the option premium was $0.60. At expiration, the stock was selling for $35.75. What is the payoff on the option contracts?
A) -$60
B) -$30
C) $0
D) $30
E) $60

Question

Quizplus · Accepted Answer

The payoff on a put option is max(0, strike price - stock price at expiration). Since the stock price ($35.75) is above the strike price ($35), the payoff is $0.

Tim Purchased 3 Put Option Contracts on Western Fields Stock