Payoff at expiry for the sale of a put option formula
Financial acronyms
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Description of the Payoff at expiry for the sale of a put option formula
Formula for calculating the payoff of a short position in a put option.
Formula
\[ R_{sp}= P - min \left( \left( S_{T}-K \right),0 \right) \ \]
Symbols
\(K\ \)
Option strike price
\(P\ \)
Value of the option premium
\(S_{T}\ \)
Price of the underlying at expiry date T of the option
The maximum gain for the sale of a put option is the amount of the option premium. The maximum loss is the difference between the option premium and the strike ST.
Additional information related to this formula
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