Question: Assume that you have shorted the call option in Problem 2. a. If the stock is trading at $55 in three months, what will you

Assume that you have shorted the call option in Problem 2.

a. If the stock is trading at $55 in three months, what will you owe?

b. If the stock is trading at $35 in three 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.


Data from problem 2

You own a call option on Intuit stock with a strike price of $40. The option will expire in exactly three months’ time.

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