The price of a stock is $64 . A trader buys 1 put option contract on the stock with a strike price of $60 when the option price is $10 . When does the trader make a profit?
A. When the stock price is below $60
B. When the stock price is below $64
C. When the stock price is below $54
D. When the stock price is below $50
D
The payoff must be more than the $10 paid for the option. The stock price must therefore be below $50 .
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