13. You own a put option on Ford stock with a strike price of $10. When you bought the put, its cost to you was $2. The

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13 You Own A Put Option On Ford Stock With A Strike Price Of 10 When You Bought The Put Its Cost To You Was 2 The 1 (109.77 KiB) Viewed 20 times

13. You own a put option on Ford stock with a strike price of $10. When you bought the put, its cost to you was $2. The option will expire in exactly six months' time. a. If the stock is trading at $7 in six months, what will be the payoff of the put? What will be the profit of the put? b. If the stock is trading at $21 in six months, what will be the payoff of the put? What will be the profit of the put? 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. and the profit of the put is $ a. The payoff of the put is $ (Round to the nearest dollar.) b. The payoff of the put is $ (Round to the nearest dollar.) c. Choose the correct diagram below. O A. O C. of the Put (S) OC. Profit of the Put ($) -10 -20- Profit of the Put (S) 20 10-4 -10- -201 d. Choose the correct diagram below. O A. -10 10- 10 20 30 40 50 -10- Stock Price at Expiration (S) 10 20 30 40 50 , and the profit of the put is $ Stock Price at Expiration ($) 20 30 40 50 Stock Price at Expiration (S) 60 Stock Price at Expiration (S) Q Q Q Q 5 Q ✔ Q Q O B. O D. OB. O D. Value of the Put (S) Value of the Put (S) Profit of the Put ($) -10- -10 -20 -10 Profit of the Put (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 Stock Price at Expiration (S) Stock Price at Expiration (S) Q Q Q ✔