Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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solve from a to d and round to nearest dollar
![You have shorted a put option on Ford stock with a strike price of $15. When you sold (wrote) the put, you received $2. The option will expire in exactly six months' time.
a. If the stock is trading at $12 in six months, what will your payoff be? What will your profit be?
b. If the stock is trading at $26 in six months, what will your payoff be? What will your profit be?
c. Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration.
d. Redo c, but instead of showing payoffs, show profits.
a. The payoff of the short is $], and the profit of the short is $
(Round to the nearest dollar.)](https://content.bartleby.com/qna-images/question/a95626c2-c90a-44bc-a423-ee585171f854/1a0d20b1-9e6a-4392-b295-308e78433fef/w1sb9f_processed.png)
Transcribed Image Text:You have shorted a put option on Ford stock with a strike price of $15. When you sold (wrote) the put, you received $2. The option will expire in exactly six months' time.
a. If the stock is trading at $12 in six months, what will your payoff be? What will your profit be?
b. If the stock is trading at $26 in six months, what will your payoff be? What will your profit be?
c. Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration.
d. Redo c, but instead of showing payoffs, show profits.
a. The payoff of the short is $], and the profit of the short is $
(Round to the nearest dollar.)
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