Cl,opter 15: Put Option Basics 
FIGURE 1 5-1. 
Put option price curve. 
~ 
it 
C: 
.Q 
a. 
0 
FIGURE 1 5-2. 
Call option price curve. 
~ 
ct 
C: 
0 
11 
10 
9 
8 
7 
6 
a 5 
Striking 
Price (50) 
Greatest 
Value for 
Time Value 
Stock Price 
0 4 ----------------------
3 
2 
1 
0 
40 45 
represents the option's 
time value premium. ________ L ________ _ 
50\ 55 60 Stock Price Intrinsic value 
remains at zero 
until striking price 
is passed. 
249 
price by the amount of the dividend. That is, the stock will decrease in price and 
therefore the put will become more valuable. Consequently, the buyer of the put will 
be willing to pay a higher price for the put and the seller of the put will also demand 
a higher price. As with listed calls, listed puts are not adjusted for the payment of cash 
dividends on the underlying stock. However, the price of the option itself will reflect 
the dividend payments on the stock.