Payoff at expiry for the sale of a put option formula
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
Related definitions from the glossary of financial terms
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Option strategy calculator • Pricing of an option (Black & Scholes)