The following diagram shows the value of a put option at expiration:

4 0

4 76 80 Stock price ($)

Option value Short put Long put Exercise price of both options Ignoring transaction costs, which of the following statements about the value of the put option at expiration is true?

a. The value of the short position in the put is $4 if the stock price is $76.

b. The value of the long position in the put is $4 if the stock price is $76.

c. The long put has value when the stock price is below the $80 exercise price.

d. The value of the short position in the put is zero for stock prices equaling or exceeding $76.

Intermediate

 LO.1