Question

The maximum option payoff from writing a put is:

Select one:

a. $0.

b. The strike price.

c. Unlimited.

d. None of these.

e. The stock price.

Answer 1

Put writer is the one who enters into a contract to buy the stock at a certain date aaaaa7 on a certain price against which he receives a premium. Now, Put writer is under obligation to buy the stock if the put buyer wants to exercise the option.

The Put writer will make profits if the buyer dont exercise. In this scnerio, writer will make a profit of premium paid by the buyer. So, the max the writer can get is the PREMIUM

Option D is correct. None of these.