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Draw a payoff diagram showing the value

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You have shorted a put option on Ford stock with a strike price of ?$13. 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 ?$11 in six? months, what will your payoff? be? What will your profit? be?

b. If the stock is trading at ?$24 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.

Reference no: EM132842764

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