You shorted a call option on Intuit stock with a strike price of $34. When you sold (wrote) the option, you received $6. The option will expire in exactly three months' time. a. If the stock is trading at $47 in three months, what will your payoff be? What will your profit be? b. If the stock is trading at $23 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. a. The payoff of the short is $, and the profit of the short is $ (Round to the nearest dollar.)

You shorted a call option on Intuit stock with a strike price of $34. When you sold (wrote) the option, you received $6. The option will expire in exactly three months' time. a. If the stock is trading at $47 in three months, what will your payoff be? What will your profit be? b. If the stock is trading at $23 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. a. The payoff of the short is $, and the profit of the short is $ (Round to the nearest dollar.)

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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