4. Draw the payoff function of a trader who writes (shorts) a European put option on one share of a stock at an option price of $10, with the strike price of $90. What would be his/her payoff from this position if the spot price of the share turns out to be $95 at the maturity of the option?

4. Draw the payoff function of a trader who writes (shorts) a European put option on one share of a stock at an option price of $10, with the strike price of $90. What would be his/her payoff from this position if the spot price of the share turns out to be $95 at the maturity of the option?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter5: Financial Options

Section: Chapter Questions

Problem 3MC: Consider Triple Play’s call option with a $25 strike price. The following table contains historical...

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4. Draw the payoff function of a trader who writes (shorts) a European put option on one share of a stock at an
option price of $10, with the strike price of $90.
What would be his/her payoff from this position if the spot price of the share turns out to be $95 at the maturity of
the option?

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