An institution buys an interest rate put option with 90 days remaining until expiration on 270-day LIBOR with a notional principal of $5 million and a strike rate of 4.125%. At option expiration, 90-day LIBOR is 3.75% and 270-day LIBOR is at 4.75%.
The option payoff at expiration, to be paid later, is closest to:
A $0.
B $4,687.50.
C $23,437.50.
D $31,250.00.