(0-8. (Calculating put option payouts) Currently, a put contract with an exercise price of $5 on a share of Milybe Aerospace's common stock is selling for (i.e., has a premium of) \$1. What does the profit or loss graph (similar to Figure 20.7) look like for this option? In drawing this graph, assume that the option is being evaluated on its expiration date. What are the maximum profit, maximum loss, and break-even point? Expiration Date Profit or Loss on Holding a Put Option Suppose you purchase a put option cn Ford Motor Compary (F) stock with an exercise price of 520 tor a premum of \$33. As hong as the expration date price of Ford's shares remains above the S20 exercise price, the put is warthless or "out of the money." If the price of Ford's shares fals below $20 per share on the expiration date, then you wit recelve $1 for every dollar the price fatis belowisoo, and once the price las below $17, you will make a profit. amount for which the put was sold. The potential losses for the put writer are limited only by the fact that the stock price cannot fall below zero. Although the stock price may fluctuate, the possible losses to the purchaser of an option are limited, whereas the possible gains are almost unlimited. That is, the most you can ever lose when you purchase a put or call option is the premium you pay for the contract. Although this may seem rather small relative to the price of the stock, it is still 100 percent of your investment