The payoff to the holder of a put option is given by
A)P = max(K - S, 0).
B)P = min(S - K, 0).
C)P= max(S - K, 0).
D)P = max(K, 0).

Name: The payoff to the holder of a put option is given by A)P = max(K - S, 0). B)P = min(S - K, 0). C)P= max(S - K, 0). D)P = max(K, 0).
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Question

Quizplus · Accepted Answer

A put option gives the holder the right to sell an asset at a specified strike price (K), so the payoff is the maximum of either the strike price minus the stock price (K - S) or 0, if exercising the option is not profitable.

The Payoff to the Holder of a Put Option Is