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Posted on Jun 10, 2024

Assume you have shorted a put option on Ford stock with a strike price of $ 11. The option will expire in exactly sixmonths' time.

a. If the stock is trading at $ 5 in sixmonths, what will youowe?

b. If the stock is trading at $ 21 in sixmonths, what will youowe?

c. Draw a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration.

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