Option Payoffs: What Is the Payoff for a Put Option

question 65

Multiple Choice

Option payoffs: What is the payoff for a put option with a strike price of $65 if the underlying stock price at expiration is $33?

• A) $0
• B) $33
• C) $32
• D) $65

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Definitions:

Realized Gains

Profits that result from selling an asset at a higher price than its cost.

Other Comprehensive Income

Earnings that are not part of net income, consisting of items such as unrealized gains and losses on certain investments.

Retained Earnings

The portion of net income that is retained by the corporation instead of being paid out as dividends to shareholders.

Earnings Management

The practice of using accounting techniques to produce financial reports that may paint an overly positive picture of a company's business activities and financial position.