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Function of the stock price at expiration

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Reference no: EM131472933

Assume you have shorted a put option on Ford stock with a strike price of $ 11. The option will expire in exactly six? months' time.

a. If the stock is trading at $ 5 in six? months, what will you? owe?

b. If the stock is trading at $ 21 in six? months, what will you? owe?

c. Draw a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration.

Reference no: EM131472933

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