To draw: A payoff graph when the given condition is purchase price X 2 is greater than sale price X 1 and compare it with the mentioned figure. Introduction: Payoff graph: It is supposed to be a graphical representation of potential outcomes of a strategy. The vertical axis depicts the profit/loss on option expiration day while the horizontal axis depicts the underlying asset price on expiration day.

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Chapter 20, Problem 14PS

Summary Introduction

To draw: A payoff graph when the given condition is purchase price X₂ is greater than sale price X₁ and compare it with the mentioned figure.

Introduction:

Payoff graph: It is supposed to be a graphical representation of potential outcomes of a strategy. The vertical axis depicts the profit/loss on option expiration day while the horizontal axis depicts the underlying asset price on expiration day.

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