Tutorial Exercise A put option in finance allows you to sell a share of stock at a given price in the future. There are different types of put options. A European put option allows you to sell a share of stock at a given price, called the exercise price, at a particular point in time after the purchase of the option. For example, suppose you purchase a six- month European put option for a share of stock with an exercise price of $27. If six months later, the stock price per share is $27 or more, the option has no value. If in six months the stock price is lower than $27 per share, then you can purchase the stock and immediately sell it at the higher exercise price of $27. If the price per share in six months is $23.50, you can purchase a share of the stock for $23.50 and then use the put option to immediately sell the share for $27. Your profit would be the difference, $27 - $23.50 $3.50 per share, less the cost of the option. If you paid $1.00 per put option, then your profit would be $3.50 $1.00 = $2.50 per share. The point of purchasing a European option is to limit the risk of a decrease in the per-share price of the stock. Suppose you purchased 310 shares of the stock at $33 per share and 120 six-month European put options with an exercise price of $27. Each put option costs $1. 1 = (a) Using data tables, construct a model that shows the value of the portfolio with options and without options for a share price in six months between $15 and $35 per share in increments of $1.00. (b) Discuss the value of the portfolio with and without the European put options.