What is the lower bound on the value of a put option?
A) Maximum of zero or exercise price − stock price
B) Maximum of zero or stock price − exercise price
C) Stock price − exercise price
D) Exercise price − stock price

Question

Quizplus · Accepted Answer

The lower bound on the value of a put option is the maximum of zero or the exercise price minus the stock price, as a put option gives the holder the right to sell the stock at the exercise price.

What Is the Lower Bound on the Value of a Put