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If I were to buy a put option with a fifty dollar excercise price and if I were to buy it for $10.00, then the value of my position the payoff for that put option, at the maturity or at the expiration I should say. At the expiration of the option. Depending on what the stock price is, and expiration would look like this: if the stock price is worth, if the stock price goes to zero then the put option is worth fifty because I could buy the stock at zero and excercise my option to sell at fifty. At "putting" the stock to someone else at fifty dollars. All the way to if the stock becomes worth fifty then my put option, I wouldn't need to excercise it because why would I? It's worthless to have the option to sell something at fifty where you can just sell the actual stock in the open market or buy the stock at fifty. So then the put option becomes worthless for a stock price above that. Now, this is the payoff diagram. And this is when we just think about the value and expiration. If we t...