Option payoffs: You own a put option on ABC. Co. stock with a strike price of $40. The current stock price is $40. You will benefit if

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As the owner of a put option with a strike price of $40, you have the right to sell the stock at $40. If the stock price goes down, the option becomes more valuable, as you can sell the stock for more than its market value. If the stock price stays the same or goes up, the option will be worthless, as you can sell the stock for more than $40 in the open market. Therefore, you will benefit if the stock price goes down.

Option Payoffs: You Own a Put Option on ABC