Consider a put option on a stock with a strike price of $60. If the stock price at expiration is $50, the payoff from the put option is $10.

Question

Quizplus · Accepted Answer

The payoff from a put option is the difference between the strike price and the stock price at expiration, as long as the stock price is below the strike price. In this case, the stock price is $50, which is below the strike price of $60, so the payoff is $60 - $50 = $10.

Consider a Put Option on a Stock with a Strike