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Payoff at expiry for the purchase of a put option

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Description

Formula for calculating the payoff of a long position in a put option.

Formula

\[ R_{lp}=max\left ( -P+(K-S_{T}),-P \right ) \ \]

Legend

\(K\ \)        Option strike price
\(P\ \)        Value of the option premium
\(S_{T}\ \)        Price of the underlying at expiry date T of the option