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Derivative markets Draw the payoff function of a trader who writes (shorts) a European put option on one share of a stock at an option
Derivative markets
Draw the payoff function of a trader who writes (shorts) a European put option on one share of a stock at an option price of $10, with the strike price of $90. What would be his/her payoff from this position if the spot price of the share turns out to be $95 at the maturity of the option?
4. Draw the payoff function of a trader who writes (shorts) a European put option on one share of a stock at an option price of $10, with the strike price of $90. What would be his/her payoff from this position if the spot price of the share turns out to be $95 at the maturity of the option? (25p)Step by Step Solution
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