2. A put option written on EnergyUs Corp. stock is selling for $2.50. The option has an exercise price of $20 and 6 months to expiration. The current market price for a share of Energy-R-Us is $26. Determine the profit from a strategy of buying the stock and buying the put, and graph these profits

3. Using the data from problem 2 compare the following 3 strategies

Purchase one share of stock and one put on the stock

Purchase one share of stock and two puts on the stock

Purchase one share of stock and three puts on the stock

\begin{tabular}{|c|r|r|r|} \hline Energy-R-Us, stock price & 26.00 & & \\ \hline Put price, X=20 & 2.50 & & \\ \hline \begin{tabular}{|c|r|} Stock price, ST \\ in 6 months \end{tabular} & Profit from put & Profit from stock & \multicolumn{1}{|c|}{ Total } \\ \hline 0 & 17.50 & 26.00 & \multicolumn{1}{|c|}{ profit } \\ \hline 5 & 12.50 & 21.00 & 8.50 \\ \hline 10 & 7.50 & 16.00 & 8.50 \\ \hline 15 & 2.50 & 11.00 & 8.50 \\ \hline 20 & 2.50 & 6.00 & 8.50 \\ \hline 25 & 2.50 & 1.00 & 3.50 \\ \hline 30 & 2.50 & 4.00 & 1.50 \\ \hline 35 & 2.50 & 9.00 & 6.50 \\ \hline 40 & 2.50 & 14.00 & 11.50 \\ \hline 45 & 2.50 & 19.00 & 16.50 \\ \hline 50 & 2.50 & 24.00 & 21.50 \\ \hline \end{tabular} \begin{tabular}{l|l|} \hline Energy-R-Us, & \\ stock price & 26.00 \\ \hline Put price, \\ X=20 & 2.50 \end{tabular} Stock price, ST Profit: 1 share + Profit: 1 share + Profit: 1 share + \begin{tabular}{lll|l} in 6 months & 1 put & 2 puts & 3 puts \end{tabular} 0 5 10 10 15 20 25 30 35 40 45 50