You have shorted a put option on Ford stock with a strike price of $8. When you sold (wrote) the put, you received $3. The option will expire in exactly six months' time.

a. If the stock is trading at $3 in six months, what will your payoff be? What will your profit be?

b. If the stock is trading at $19 in six months, what will your payoff be? What will your profit be?

c. Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration.

d. Redo c, but instead of showing payoffs, show profits.