1. You shorted a call option on Intuit stock with a strike price of $33. When you sold (wrote) the option, you received $4. The option will expire in exactly three months' time.

a. If the stock is trading at $47 in three months, what will your payoff be? What will your profit be?

b. If the stock is trading at $26 in three months, what will your payoff be? What will your profit be?

c. Draw a payoff diagram showing the payoff at expiration as a function of the stock price at expiration.

d. Redo c, but instead of showing payoffs, show profits.

2. You own a put option on Ford stock with a strike price of $11. When you bought the put, its cost to you was $2. The option will expire in exactly six months' time.

a. If the stock is trading at $6 in six months, what will be the payoff of the put? What will be the profit of the put?

b. If the stock is trading at $22 in six months, what will be the payoff of the put? What will be the profit of the put?

c. Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration.

d. Redo c, but instead of showing payoffs, show profits.