How profit in option depends on stock price at maturity

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Reference no: EM131237140

Suppose that a European put option to sell a share for $60 costs $8 and is held until maturity. Under what circumstances will the seller of the option (the party with the short position) make a profit? Under what circumstances will the option be exercised?

Draw a diagram illustrating how the profit from a short position in the option depends on the stock price at maturity of the option.

Reference no: EM131237140

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