Final answer:
The profit at maturity of the short put sold at $10 with a strike price of $100 and an underlying asset price of $120 is -$20.
Step-by-step explanation:
The profit at maturity of a short put sold at $10 with a strike price of $100, when the underlying asset price is $120, can be calculated as follows:
- If the put option is exercised, the seller will have to buy the underlying asset at the strike price of $100 even though its market price is $120.
- The profit at maturity is the difference between the strike price and the market price of the asset, multiplied by the number of shares the option contract represents.
- In this case, the profit at maturity can be calculated as follows: ($100 - $120) x 1 = -$20.
Therefore, the profit at maturity of the short put sold at $10 with a strike price of $100 and an underlying asset price of $120 is -$20.