You Write a Put Option on a Stock

question 51

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,S_T is the stock price at contract expiration and P₀ is the original premium of the put option.

• A) Max(P₀, X - S_T - P₀)
• B) Min(-P₀, X - S_T - P₀)
• C) Min(P₀, S_T - X + P₀)
• D) Max(0, S_T - X - P₀)

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Definitions:

Debriefing

A process of reflective conversation following an event or activity, aimed at sharing observations and learning outcomes.

Cost Effectiveness

A measure of how economically resources are used to achieve a goal, ensuring minimal waste of effort and expense.

Emotional Damage

Psychological harm caused by experiences that lead to emotional distress and mental suffering.