You own a put option on Ford stock with a strike price of $9. When you...

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You own a put option on Ford stock with a strike price of $9. When you bought the put, its cost to you was $2. The option will expire in exactly six montha' time. a. If the stock is trading at $7 in six months, what will be the payoff of the put? What will be the profit of the put? b. if the stock is trading at $19 in six manths, what will be the payoff of the put? What will be the profit of the put? 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. You own a put option on Ford stock with a strike price of $9. When you bought the put, its cost to you was $2. The option will expire in exactly six montha' time. a. If the stock is trading at $7 in six months, what will be the payoff of the put? What will be the profit of the put? b. if the stock is trading at $19 in six manths, what will be the payoff of the put? What will be the profit of the put? 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.

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Put optionA put option gives the holder the right but not obligation t... View the full answer