Question: 3. [16 Marks] Options Contracts Assume that put options on the shares of Orion Plc have an Exercise Price of E=400p per share and expire

3. [16 Marks] Options Contracts Assume that put options on the

3. [16 Marks] Options Contracts Assume that put options on the shares of Orion Plc have an Exercise Price of E=400p per share and expire on 30 September 2020. Suppose that an investor buys put options on 1,000 shares paying a premium (put option price) of 20p each. (a) Explain how to obtain the investor's payoffatexpiry for each of the following ranges of Orion's share price (ST) and illustrate in a diagram for 1 put option. (i) Share price ST >400p; (ii) Share price St=400p; (iii) 290p400p; (ii) Share price St=400p; (iii) 290p

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