Series 7 practice questioneasyOptions — Put Writer Max Gain
What is the maximum gain for a writer of a put option?
- AThe strike price minus the premium
- BThe strike price
- CUnlimited
- DThe premium received✓ Correct answer
Explanation
Why D — The premium received
The maximum gain for a put writer is the premium received. If the stock stays at or above the strike price, the put expires worthless and the writer retains the full premium. The put writer's maximum gain is always limited to the premium, regardless of how high the stock rises.
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