$18 $16 $14 $12 $10 $8 $6 $4 PUT PRICE (6-MONTH EXPIRY) vs STRIKE $2 $0 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 606162636465 PUT PRICE @ 22% IV PUT PRICE @ 40% IV Current stock price for XYZ = $50 Interest rate = 3% Dividend rate = 0% The graph shows the price profile (option price vs strike, Black-Scholes model) of 6-month options on XYZ, for two different implied volatilities (IVs): 22% and 40%. 22% is the implied volatility where the $50-strike put is priced and 40% is the implied volatility where the $30 strike put was priced a) Can you locate on the graph the price ($2.74) of the $50-strike put (priced at 22% implied volatility) and the price ($0.14) of the $30-strike put (priced at 40% implied volatility)? b) At what value of the strike is the price difference (for the two different implied volatilities) the biggest? Any thoughts on this?