You have shorted a put option on Ford stock with a strike price of $13. When you sold (wrote) the put, you received $5. The option will expire in exactly six months' time. a. If the stock is trading at $8 in six months, what will your payoff be? What will your profit be? b. If the stock is trading at $24 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. Redoc, but instead of showing payoffs, show profits. a. The payoff of the short is $ (Round to the nearest dollar.) and the profit of the short is $

You have shorted a put option on Ford stock with a strike price of $13. When you sold (wrote) the put, you received $5. The option will expire in exactly six months' time. a. If the stock is trading at $8 in six months, what will your payoff be? What will your profit be? b. If the stock is trading at $24 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. Redoc, but instead of showing payoffs, show profits. a. The payoff of the short is $ (Round to the nearest dollar.) and the profit of the short is $

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section: Chapter Questions

Problem 2P

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