1. ABC stock is currently trading at a market price (S) of $50. You do not own the stock, but you are long a put option on 1 share with a strike price (X) of $43. The cost put (premium) was $2.
   1. The value of an option is composed of Intrinsic Value and Time Value. How you split the $2 premium up between these two components?
      1. Time Value = and ii. Intrinsic Value =
2. 2. Using Excel or drawing by hand, create a payoff diagram for this put option using a range of $30 to $60 along the x-axis. Show on the graph where the 1) current price (S), 2) strike price (X) and breakeven point.
3. 3. Compute the profit or loss of the strategy if the stock price at expiration is equal to:

1C1 $33:

1C2 $43:

1C3 $49:

1C4 $53:

1C5 $59:

1. 4. What is the strategys maximum gain?
2. 5. What is the strategys maximum loss?