Explanation

For a put option buyer:

• Put option premium (cost): $4 (paid by buyer)
• Exercise price: $58
• Underlying price at expiration: $57

Profit calculation for put buyer:

1. Intrinsic value at expiration: Exercise price - Underlying price = $58 - $57 = $1
2. Profit: Intrinsic value - Premium paid = $1 - $4 = -$3

Step-by-step reasoning:

• The put buyer has the right to sell the underlying at $58
• At expiration, the underlying is worth $57, so the put option has intrinsic value of $1 ($58 - $57)
• However, the buyer paid $4 for the option, so their net profit is $1 - $4 = -$3
• This represents a loss of $3

Why other options are incorrect:

• Option B ($1): This is only the intrinsic value, not accounting for the premium paid
• Option C ($3): This would be the profit if the underlying price was $54 ($58 - $54 = $4 intrinsic value, $4 - $4 = $0 profit) or if the premium was $1 instead of $4

The correct answer is A (-$3) because the put buyer's profit is calculated as: (Exercise Price - Underlying Price) - Premium Paid = ($58 - $57) - $4 = -$3