Question

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.

Answer 1

Answer:

Min (P0, ST - X + P0)

Explanation:

Put Option is a business term that accurately describes the option or right to sell an asset at a specified exercise price or simply put, agreed rate on or before a given or agreed expiration date.

Hence, the correct answer is Min (P0, ST - X + P0)

Note the following:

X equals the option's strike price,  

ST is the stock price at contract expiration,

P0 is the original premium of the put option.