At contract maturity the value of a put option is ________, where X equals the option's strike price and ST is the stock price at contract expiration. A) max (0, S_T − X) B) min (0, S_T− X) C) max (0, X − S_T) D) min (0, X − S_T)

Question

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At contract maturity, the put option would only be exercised if the stock price (ST) is below the strike price (X). Therefore, the value of the put option would be the maximum of zero or the difference between the strike price and the stock price (X-ST). This means that the option holder would exercise the option to sell the stock at the strike price, which would be higher than the current stock price. Choice C represents this calculation correctly.

At Contract Maturity the Value of a Put Option Is