At expiry, a holder of a put option (with an exercise price of $5.50 purchased for a premium of $0.45)over Foster's Group Ltd shares (now trading at $5.69)will:

Question

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At expiry, if the market price ($5.69) is higher than the exercise price ($5.50), the holder of a put option would not exercise the option because they would lose money by selling shares at a lower price than the market price. Instead, they would let the option expire worthless, resulting in a loss equal to the premium paid ($0.45 per share).

At Expiry, a Holder of a Put Option (With an Exercise