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Asking about these question below. Please give me detailed explanation and proper answer in Excel. Thanks so much! 4. You own a put option on
Asking about these question below. Please give me detailed explanation and proper answer in Excel. Thanks so much!
4. You own a put option on Ford stock with a strike price of $10. 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 $8 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 $23 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. JAM MUUT 5. Assume that you have shorted the put option in Problem 4. When you sold (wrote) the put, you received $2. a. If the stock is trading at $8 in three months, what will your payoff be? What will your profit be? b. If the stock is trading at $23 in three months, what will your payoff be? What will your profit be? c. Draw a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration. d. Redo (c), but instead of showing payoffs, show profits. 4. You own a put option on Ford stock with a strike price of $10. 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 $8 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 $23 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. JAM MUUT 5. Assume that you have shorted the put option in Problem 4. When you sold (wrote) the put, you received $2. a. If the stock is trading at $8 in three months, what will your payoff be? What will your profit be? b. If the stock is trading at $23 in three months, what will your payoff be? What will your profit be? c. Draw a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration. d. Redo (c), but instead of showing payoffs, show profitsStep by Step Solution
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