1. Consider a European call option on a stock with a strike price of $10 and an option premium of $1. The option matures in July 2016. Draw its payoff (as a function of the stocks price in July 2014) to its writer.

Now draw its profit (as a function of the stocks price in July 2016) to its writer.

Consider a European call option on a stock with a strike price of $10 and an option premium of $1. The option matures in July 2016. Draw its payoff (as a function of the stock's price in July 2014) to its writer 1. Payoff +$10 50 Stock Price in July 201 510 Stock Pricein July 2016 S10 Now draw its profit (as a function of the stock's price in July 2016) to its writer. Profit +$10 50 $10 Stock Pricein July 2016 S10