In November 2014, the Mexican Government bought a Put-type sale option to secure the sale price of 228 million barrels of oil at 76.4 USD/barrel, during 2015. The premium paid was USD 773 million.

Obtain the profit curve, expressed in USD/barrel, based on the cost of the underlying, considering the views of the buyer and the seller.

Assuming that the option that was purchased is American type, explain how it went to the Mexican Government if during 2015 the price of oil was at 55 USD/barrel. Also, explain what happened to the bank that sold the option.

Assuming that the option that was purchased is American type, repeat the above if during the year the price of oil was at 90 USD/barrel. Also, explain what happened to the bank that sold the option.