Construct the payoff and profit tables and draw the payoff

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Reference no: EM131586008

Construct the payoff / profit tables and draw the payoff / profit diagrams at maturity for the following positions in options. Clearly label all the diagrams.

a. Buy an American put option with exercise price equal to $10 and buy the underlying stock, which trades at $10. The price of the put option is $2.

b. Buy one American put option with exercise price equal to $50 and buy one American call option with the same exercise price on the same stock. The put and call options are trading at $3 and $2, respectively.

Reference no: EM131586008

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