20. You wrote (sold) a put contract with a strike price of $50 and an expiration date in 6 months. The current stock price is $48 and the contract is for 100 shares. a. What does writing the put option imply?

You can choose whether to exercise the option or not.

You must buy the underlying stock from the option buyer if the buyer chooses to exercise the option.

You must sell the underlying stock to the option buyer if the buyer chooses to exercise the option.

You will make money when the stock price falls.

b. How big is your maximum gain (payoff)?

$0

$200

$4800

$5000

Infinite

c. How big is your maximum loss (payoff)?

$0

$200

$4800

$5000

Infinite