The maximum option payoff from:
A)writing a put is $0.
B)buying a put is $0.
C)writing a call is an unlimited profit.
D)buying a call is the strike price.
E)writing a call is the stock price.

Question

Quizplus · Accepted Answer

When you write (sell) a put option, the maximum payoff you can receive is the premium you collect upfront, because the best-case scenario is that the option expires worthless (the stock price is above the strike price), and you keep the premium. If the stock price falls below the strike price, you may have to buy the stock at the strike price, which can result in losses, but the initial transaction of writing the put cannot yield more than the premium collected.

The Maximum Option Payoff From