CH 11

You own a call option on Intuit stock with a strike price of $ 45. The option will expire in exactly threemonths' time.

a. If the stock is trading at $ 54 in threemonths, what will be the payoff of thecall?

b. If the stock is trading at $ 34 in threemonths, what will be the payoff of thecall?

c. Draw a payoff diagram showing the value of the call at expiration as a function of the stock price at expiration.