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Write out the payoff and profit function for strategy

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Reference no: EM133074291

You buy a put optionshort a put with X=70 and with X=60. The options are on the same stock and have the same maturity date. One option sells for $3 and the other option sells for $9.

  1. Write out the payoff and profit function for this strategy at the option maturity date
  2. Draw the payoff and profit graph for this strategy at the option maturity date.
  3. What is the breakeven point for this strategy? What is the investor's betting on the stock?

Reference no: EM133074291

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