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You Write a Put Option on a Stock

Question 3

Multiple Choice

You write a put option on a stock. The profit at contract maturity of the option position is ________, where X equals the option's strike price, ST is the stock price at contract expiration, and P0 is the original premium of the put option.


A) max (P0, X − ST − P0)
B) min (−P0, X − ST − P0)
C) min (P0, ST − X + P0)
D) max (0, ST − X − P0)

Correct Answer:

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