Option pay-offs: What is the pay-off for a put option with a strike price of $65 if the underlying share price at expiration is $33?

Question

Quizplus · Accepted Answer

A put option gives the holder the right to sell the underlying asset at the strike price. Therefore, if the underlying share price is below the strike price at expiration, it is profitable to exercise the put option. In this case, the share price is $33 which is below the strike price of $65, so exercising the put option would result in a payout of $65 - $33 = $32.

Option Pay-Offs: What Is the Pay-Off for a Put Option