Option Payoffs: What Is the Payoff for a Put Option

question 24

Multiple Choice

Option payoffs: What is the payoff for a put option with a strike price of $20 if the price of the underlying stock at expiration is $18?

• A) $0
• B) $2
• C) $18
• D) $20

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Definitions:

Income from Operations

The earnings generated from a company's core business operations before subtracting interest and taxes.

Profit-Volume Chart

A graphical representation that shows the relationship between a company's profits and its level of output or sales volume.

Total Sales

The sum of all revenues earned from selling goods or services within a specific period.

Total Costs

The sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.