(Put option basics) It is mid-May 2015. Intel stock is currently trading at $33, and you think that the price of the stock will go down by 16 October 2015.

For $3 you can buy a put on Intel stock that expires in 16 October 2015 and that has an exercise price of $34.

a. What right does this put option give you?

b. What happens if the stock does not go below $34 by the time your option expires?

c. Suppose you buy the option and hold it until the expiration date. If the price of Intel on 16 October 2015 is $20, what will be your profit from the option?

d. What will be your profit from the option if the price is $38?