Illustrating how the profit from a short position

Reference no: EM133432493

Question: Suppose that a trader sells a September European call option to buy a share for $10 which costs $1.
Now we are at expiration, under what circumstances will the seller of the option (i.e., the trader with the short position) make a profit?
Under what circumstances will the option be exercised?

Draw a diagram (by hand and insert a photograph) illustrating how the profit from a short position in the option depends on the stock price at maturity of the option.

provide an expanded answer with APA references

Reference no: EM133432493

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