Use the figure for the question(s)below.
-This graph depicts the payoffs of
A)a long position in a put option at expiration.
B)a long position in a call option at expiration.
C)a short position in a put option at expiration.
D)a short position in a call option at expiration.

Question

Use the figure for the question(s)below. 
-This graph depicts the payoffs of
A)a long position in a put option at expiration. 
B)a long position in a call option at expiration. 
C)a short position in a put option at expiration. 
D)a short position in a call option at expiration.

Quizplus · Accepted Answer

A long position in a put option at expiration means that the holder of the option has the right, but not the obligation, to sell the underlying asset at a specified price (the strike price) on or before a specified date (the expiration date). If the price of the underlying asset falls below the strike price, the holder of the put option will exercise the option and sell the asset at the strike price, thereby making a profit. The graph depicts this payoff structure, as the payoff increases as the price of the underlying asset falls below the strike price.

Use the Figure for the Question(s)below