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Suppose that a June put option to sell a share for $50 costs $2.50 and is held until June. Under what circumstances will the seller
Suppose that a June put option to sell a share for $50 costs $2.50 and is held until June. Under what circumstances will the seller of the option make a profit? Under what circumstances will the option be exercised? Draw a diagram illustrating how the profit from a short position in the option depends on the stock price at maturity of the option.
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