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You have shorted a put option on Ford stock with a strike price of $15. When you sold (wrote) the put, you received $2. The
You have shorted a put option on Ford stock with a strike price of $15. When you sold (wrote) the put, you received $2. The option will expire in exactly six months' time. a. If the stock is trading at $11 in six months, what will your payoff be? What will your profit be? b. If the stock is trading at $27 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
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