If a writer sells a put with a strike price of $70 at $3 per share, what is his profit or loss if the underlying stock at expiration is selling at $72?
A) $4
B) $3
C) -$3
D) -$4

Question

Quizplus · Accepted Answer

The writer's profit is the premium received, which is $3 per share. Since the stock price at expiration ($72) is above the strike price ($70), the put option will not be exercised, allowing the writer to keep the entire premium as profit.

If a Writer Sells a Put with a Strike Price