$.$June holds $600$ shares of ISD. She bought the stock several years ago at $48\mathrm{.}5$ and the shares are now

trading at $$75\mathrm{.}00.$ June is concerned that the market is beginning to soften. She doesn$$t want to sell the

stock, but she would like to be able to protect the profits she$$s made. She decides to hedge his position by

buying $6$ puts on LGL$.$ The three month puts carry a strike price $$75\mathrm{.}00$ and are currently trading at $$2\mathrm{.}5.$

a$).$How much profit or loss will June make on the deal if the price of LGL does indeed drop to

$$60\mathrm{.}00$ a share by the expiration date on the puts?

b$.)$ How would she do if the stock kept going up in price and reached $$90\mathrm{.}00$ a share by the expiration

date?

c$.)$ What do you see as the major advantages of using puts as hedge vehicles?