Assume you have shorted a put option on Ford stock with a strike price of

$9.

The option will expire in exactly six months. a. If the stock is trading at

$7

in six months, what will you owe?b. If the stock is trading at

$20

in six months, what will you owe?

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

a. If the stock is trading at

$7

in six months, what will you owe?If the stock is trading at

$7

in six months, you will owe

$22.

(Round to the nearest dollar.)b. If the stock is trading at

$20

in six months, what will you owe? If the stock is trading at

$20

in six months, you will owe

$00.

(Round to the nearest dollar.)

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

Which of the graphs below best represents the payoff diagram showing the amount you owe?(Select the best choice below.)

O A. Cash Flow ($) 0 B. Cash Flow ($) 10 15 20 25 30 35 40 45 50 55 60 5 10 15 20 25 30 35 40 45 50 55 60 -8 -123 -16 -20% -12 -16 Stock Price (5) 203 Stock Price ($) C 243 20 16 12 8 243 20 16- 12 O Cash Flow ($) D. Cash Flow ($) 10 15 20 25 30 35 40 45 50 55 60 5 10 15 20 25 30 35 40 45 50 55 60 co