Unisuper is holding a large number of Qantas shares in an investment portfolio and wishes to protect the value of the investment. The shares currently trade at $3.28. Unisuper buys a put option with an exercise price of $3.18 and a premium of $0.08 per share.

(a) What is a put option?

b) By entering this option strategy, explain whether Unisuper will exercise the option if the spot price is above or below the exercise price.

c)Calculate the break-even price for this strategy