SIE practice questionmediumMax gain/loss
What is the maximum gain for a written (short) put option?
- AUnlimited
- BThe premium received✓ Correct answer
- CMarket price of the underlying
- DDifference between stock price and strike price
Explanation
Why B — The premium received
The most a put writer can gain is the premium collected up front. Their risk is substantial if the stock price falls, but their gain does not grow beyond the premium.
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