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Assume that you have shorted a call option on Intuit stock with a strike price of $40; when you originally sold (wrote) the option, you
Assume that you have shorted a call option on Intuit stock with a strike price of $40; when you originally sold (wrote) the option, you received $5. The option will expire in exactly three months' time. a. If the stock is trading at $55 in three months, what will your payoff be? What will your profit be? b. If the stock is trading at $35 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. a. If the stock is trading at $55 in three months, your payoff is . The profit of the call is 7. (Round to the nearest dollar and include a negative sign where appropriate.) b. If the stock is trading at $35 in three months, your payoff is . The profit of the call is (Round to the nearest dollar and include a negative sign where appropriate.) c. Which of the graphs below is the best representation of a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration
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