Problem 1. A June put option to sell a share of a stock for $60 costs $4 and is held until June. Please draw a diagram showing how the profit from a short position in the option depends on the stock price at the maturity of the option. Problem 2. It is October and a trader speculates that the price of a stock will drop in December. The stock price right now is $18 and the option price is $2. The trader writes a December call option with a strike price of $20. If the option is held until December and the stock price is $25 at that time, what the trader needs to do and what is the gain or loss? Problem 3. The table below shows USD-sterling spot and forward exchange rates. A 180-day European call option to buy 1 for $1.52 costs 2 cents. A 90-day European put option to sell 1 for $1.59 costs 2 cents. What opportunities an arbitrageur might have in this situation and what are the arbitrageur's gains and losses in these opportunities? 1.5580 1.5556 1.5518 Spo 90-day forward 180-day forward