Before the wave moves along the rope, P is at its regular position. When the waves start to move along the rope, P will oscillate up and down.
First it moves upwards. It is displaced upwards, and is moving upwards.
Next, it reaches its highest point. It has been displaced upwards, but is no longer moving upwards or downwards; it is stationary.
Then, it starts to move back down again. It has still been displaced upwards, because it is above its regular position, but it is moving downwards.
And so on. Sorry for the lack of a diagram, but I hope this has clarified enough so that you can have a go at the question.