Assume you have shorted a put option on Ford stock with a strike price of $13. The option will expire in exactly six months. a. If the stock is trading at $8 in six months, what will you owe? b. If the stock is trading at $22 in six months, what will you owe? c. Draw a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration.
Assume you have shorted a put option on Ford stock with a strike price of $13. The option will expire in exactly six months. a. If the stock is trading at $8 in six months, what will you owe? b. If the stock is trading at $22 in six months, what will you owe? c. Draw a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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![Assume you have shorted a put option on Ford stock with a strike price of $13. The option will expire in exactly six months.
a. If the stock is trading at $8 in six months, what will you owe?
b. If the stock is trading at $22 in six months, what will you owe?
c. Draw a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fef764347-a038-4695-b3d3-9b62a3eb00a5%2Fe39ee46d-d834-44eb-8060-56dd702e962b%2Fgyjkebh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Assume you have shorted a put option on Ford stock with a strike price of $13. The option will expire in exactly six months.
a. If the stock is trading at $8 in six months, what will you owe?
b. If the stock is trading at $22 in six months, what will you owe?
c. Draw a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration.
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