Questions 18 and 19 relate to the following information Your mother is the CEO of Barter Ltd, a silver mining company that extracts silver to sell to export markets. She is concerned that the price the company receives for silver will fall so the company purchases a whole lot of put options with 90 days to go until expiry where the underlying asset of each option is an ounce of silver. The options the company purchases are American-style options with an exercise price of $30 per ounce. The current price of silver is $28 per ounce and they paid $2.65 for each of the options. 18. Draw the profit diagram of the option described above (written on a single ounce of silver). Label all axes, intercepts and turning points. [7 marks ] 19. Within minutes of your mother purchasing the option, she rings you in a panic. "I'm concerned that the price of silver might increase rendering our options valueless! Should I exercise these options now before the price of silver goes up?". Carefully, but briefly in no more than 6 lines, explain to your mother what she should do with the options just purchased on the basis of her belief about where the price of silver is headed. Assume that prices have not yet changed. Questions 18 and 19 relate to the following information Your mother is the CEO of Barter Ltd, a silver mining company that extracts silver to sell to export markets. She is concerned that the price the company receives for silver will fall so the company purchases a whole lot of put options with 90 days to go until expiry where the underlying asset of each option is an ounce of silver. The options the company purchases are American-style options with an exercise price of $30 per ounce. The current price of silver is $28 per ounce and they paid $2.65 for each of the options. 18. Draw the profit diagram of the option described above (written on a single ounce of silver). Label all axes, intercepts and turning points. [7 marks ] 19. Within minutes of your mother purchasing the option, she rings you in a panic. "I'm concerned that the price of silver might increase rendering our options valueless! Should I exercise these options now before the price of silver goes up?". Carefully, but briefly in no more than 6 lines, explain to your mother what she should do with the options just purchased on the basis of her belief about where the price of silver is headed. Assume that prices have not yet changed