On this page
Record the initial receipt
The writer receives 5 at initiation for the fictional put. A received premium is positive cash for this side. The holder pays the same amount under the no-cost contract comparison.
Apply the negative holder payoff
At terminal price 90, the put holder payoff is max(100−90,0)=10. Writer settlement is −10. Adding the premium receipt gives simple profit −10+5=−5.
Inspect other terminal prices
| Terminal price | Writer settlement | Simple profit |
|---|---|---|
| 0 | -100 | -95 |
| 90 | -10 | -5 |
| 95 | -5 | 0 |
| 100 | 0 | 5 |
| 120 | 0 | 5 |
Use the supplied nonnegative-price domain
Under this one-unit simple model, minimum profit occurs at S=0 and is −95; maximum is the received 5 when the holder payoff is zero. Margin, assignment and settlement funding are separate questions not modeled by these bounds.