(A) –$10
(B) $0
(C) $1
(D) $10
The answer is: (B) $0
Here, price at expiration = ST = 100
Exercise price = K = 90
Put Option = max(K-ST,0) = max(90-100,0) = max(-10,0)
So, between -10 and 0, the maximum value is 0.
(A) –$10
(B) $0
(C) $1
(D) $10
The answer is: (B) $0
Here, price at expiration = ST = 100
Exercise price = K = 90
Put Option = max(K-ST,0) = max(90-100,0) = max(-10,0)
So, between -10 and 0, the maximum value is 0.