The value of a put option at expiration is
A) max [0, S(T) - X].
B) max [0, X - S(T)].
C) min [0, X - S(T)].
D) X

Question

Quizplus · Accepted Answer

The value of a put option at expiration is the maximum of either 0, or the strike price minus the stock price. Therefore, the correct formula is max [0, X - S(T)]. However, the question seems to have a typo, as the "F1F1F1" symbols are not a valid mathematical operation. Assuming this is meant to be a subtraction symbol, the correct formula is max [0, X - S(T)], which corresponds to choice B.

The Value of a Put Option at Expiration Is