Question: Pierre purchases a put option on Altec that has a strike price of $12 and a premium of $1. Altec's stock price is now at

Pierre purchases a put option on Altec that has a strike price of $12 and a premium of $1. Altec's stock price is now at $10, an all time high, although the stock has traded as low as $5 in 2008. What is the MAXIMUM profit that Pierre can hope to earn on this put option?

a. $5

b. $8

c. $9

d. $10

e. $11

f. Unlimited - there is no limit to Pierre's profit

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