Question
4. Paul is a risk-averse investor who decides to buy a put option to sell his 100 shares of Emerald Ltd. The strike/exercise price is
4. Paul is a risk-averse investor who decides to buy a put option to sell his 100 shares of Emerald Ltd. The strike/exercise price is R430, and the option price/premium is R27.20. Assume the following share prices over 2 months: R400, R430, and R520
Required
a) Determine the pay-off and profit /(loss) profile of the holder of the put option
b) Determine the pay-off and profit / (loss) profile of the writer of the put option
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The Handbook Of Traditional And Alternative Investment Vehicles Investment Characteristics And Strategies
Authors: Mark J. P. Anson, Frank J. Fabozzi, Frank J. Jones
1st Edition
0470609737, 978-0470609736
