Final answer:
The profit at maturity of a long put option bought at 10 with a strike price of 100 when the underlying asset price is at 120 at maturity is -10. This represents a loss equal to the premium paid for the option, as it would not be exercised it being out of the money. Therefore, the correct option is D.
Step-by-step explanation:
The profit at maturity of a long put option depends on the difference between the strike price and the price of the underlying asset at maturity. A long put option gives the holder the right to sell the underlying asset at the strike price. In this scenario, the strike price is 100, and the long put was bought at a price of 10. If the underlying asset price at maturity is 120, the option will be out of the money, and it would not be exercised because the market price is more favorable than the strike price. Therefore, the holder of the long put will not exercise the option and will simply lose the premium paid for the option.
In this case, the profit at maturity for this long put option would be the negative value of the premium paid, which is -10. The reason being that the option will expire worthless, and the holder can only count the initial cost of buying the put as a loss.
Answer choice d. -10 accurately represents the profit at maturity of the long put option, as the holder does not gain anything from the contract and only incurs the cost of the option premium they paid.