This pair of diagram shows the outcome for a long put option position at various different outcomes for the underlying stock price at expiration, taking into account both the gain potentially made on expiry, and also the option premium.

For this example, a European stock option will be used with a strike price of $500 and a premium of $20.

For the long put option, who will have paid the $20 premium to buy the option, whatever the outcome at expiration. If they choose to abandon the option and not to exercise it, they will still incur that premium as an expense. This will happen if the underlying asset price is above $500 on the expiration date. If the underlying stock is above 500 on expiration, it makes no sense for this owner of the option to deliver the underlying asset and to receive $500 for it, as they are allowed to do under the terms of this put option. Since they could sell the underlying stock for more in the open market. In this scenario, the premium is still incurred as an expense, giving an overall loss of $20, to the right hand side of this diagram.

If the underlying stock is below $500 on the expiration date, it makes sense for the option holder to deliver the underlying stock and take receipt of the strike price of 500, even though the underlying asset is worth less than this. The best outcome for the option owner is for the underlying stock to be worthless at expiration, and they would still be able to, at expiration, deliver this underlying stock and receive the strike price for it. The breakeven point for the long put option position in this example is at $480. At this price at expiration, it makes sense for the option owner to exercise it to deliver the underlying stock that's only worth 480 but receive the 500 strike price for it, making for themselves a $20 gain at expiration. Netting off with the $20 premium previously paid. For the short put option payoff diagram where the option has been sold by this particular counterparty, they will have received the premium of $20 that they will keep, and nothing else will happen if the option is abandoned by the owner. Which as previously mentioned, will happen if the underlying stock price is greater than $500 at expiration. If the underlying stock price is less than 500 at expiration, the option owner will choose to deliver the stock to the short put position, and the short put position will have to pay the 500 strike price for it. So they will be paying $500 for an asset that is worth less than 500, suffering a loss.

The worst case outcome here is that the short put has to pay $500 to buy a worthless asset.

The breakeven position here is at $480, where the option owner will exercise their rights. The short put option will be required to pay $500 to buy the stock that is only worth 480, suffering at $20 loss. Which will net off with the premium of 20 previously received.