Question
You shorted a call option on Intuit stock with a strike price of $36. When you sold (wrote) the option, you received $7. The option
You shorted a call option on Intuit stock with a strike price of $36. When you sold (wrote) the option, you received $7. The option will expire in exactly three months' time.
a. If the stock is trading at $56 in three months, what will your payoff be? What will your profit be?
b. If the stock is trading at $31 in three months, what will your payoff be? What will your profit be?
c. Draw a payoff diagram showing the payoff at expiration as a function of the stock price at expiration.
d. Redo c, but instead of showing payoffs, show profits.
Round to the nearest dollar. Full explanations with the right answer will be rewarded with a like and comment! Cheers!
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