14 You Have Shorted A Put Option On Ford Stock With A Strike Price Of 15 When You Sold Wrote The Put You Received 1 (108.26 KiB) Viewed 10 times
14. You have shorted a put option on Ford stock with a strike price of $15. When you sold (wrote) the put, you received $4. 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. a. The payoff of the short is $ (Round to the nearest dollar.) b. The payoff of the short is $ (Round to the nearest dollar.) c. Choose the correct diagram below. OA. O C. 20- 10 t 10 -10- -20- Stock Price at Expiration (S) O C. Value of the Short ($) Value of the Short (S) 20 10- Profit of the Short (S) -10- -20- d. Choose the correct diagram below. O A. 20- Stock Price at Expiration (S) 30 40 50 60 10 20 30 40 50 60 , and the profit of the short is $ P 10 -20- , and the profit of the short is $ 10 V 10 30 40 50 60 Stock Price at Expiration (S) Stock Price at Expiration (S) 20 30 40 50 60 Q Q G Q Q Q 2 Q Q OB. O D. OB. O D. Value of the Short ($) Value of the Short (S) 2 -10- -20- -20- 20 -10- -201 20 101 -201 20 30 40 50 60 Stock Price at Expiration (S) 10 20 30 40 50 60 Stock Price at Expiration (S) 10 20 30 40 50 60 Stock Price at Expiration (S) 10 20 30 40 50 60 Stock Price at Expiration ($) Q Q Q Q Q ✔
18. A $1,000 face value convertible bond has a conversion ratio of 42 and is about to mature. Ignoring any transaction costs, what price must the stock surpass in order for you to convert? The required price per share will be $ (Round to the nearest cent.)
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