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Homework answers / question archive / An American Put option expiring 6 months from now on a certain stock has a strike price of $100 and the premium paid for the put was $20

An American Put option expiring 6 months from now on a certain stock has a strike price of $100 and the premium paid for the put was $20

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An American Put option expiring 6 months from now on a certain stock has a strike price of $100 and the premium paid for the put was $20. Today, the stock price fell to $20 per share. Please mark the only incorrect statement about the put option.

  a.

The break-even point for the put option is $80

  b.

The maximum loss for the buyer of the put will be $20  

  c.

The maximum net loss for the writer of the put would be $100

  d.

If the buyer were to exercise the put today, its profit would amount to $60

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