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The figure below shows the payoff diagram of a stock option. with the y-exis refers to the option payo. and the x-axis refers to the
The figure below shows the payoff diagram of a stock option. with the y-exis refers to the option payo. and the x-axis refers to the share price To replicate the option payoff structure displayed in the gure below. you can [Hint The put-call parityis useful to address this question] A, Hold a call option today, and at the same time, buy a stock using funds borrowed at risk-free rate B. Write a call option today, and at the same time, buy a stock using funds borrowed at risk-free rate C. Hold a call option today, and at the same time. shortsell a Stock and invest the proceeds in a bank at riskfree rate D. Write a call option today. and at the same time. shortvsell a stock and invest the proceeds in a bank at risk-free rate
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