You have shorted a put option on Ford stock with a strike price of $12. When...
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You have shorted a put option on Ford stock with a strike price of $12. When you sold (wrote) the put, you received $5. The option will expire in exactly six months' time. a. If the stock is trading at $5 in six months, what will your payoff be? What will your profit be? b. If the stock is trading at $22 in six months, what will your payoff be? What will your profit be? c. Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration. d. Redo c, but instead of showing payoffs, show profits. a. The payoff of the short is S,and the profit of the short is $ (Round to the nearest dollar.) You have shorted a put option on Ford stock with a strike price of $12. When you sold (wrote) the put, you received $5. The option will expire in exactly six months' time. a. If the stock is trading at $5 in six months, what will your payoff be? What will your profit be? b. If the stock is trading at $22 in six months, what will your payoff be? What will your profit be? c. Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration. d. Redo c, but instead of showing payoffs, show profits. a. The payoff of the short is S,and the profit of the short is $ (Round to the nearest dollar.)
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