Assume that you have shorted a call option on intuit stock, Ask an Expert

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Assume that you have shorted a call option on Intuit stock with a strike price of $31?; when you originally sold? (wrote) the? option, you received $5. The option will expire in exactly three? months' time.

a. If the stock is trading at $ 36 in three? months, what will your payoff? be? What will your profit? be?

b. If the stock is trading at $ 25 in three? months, what will your payoff? be? What will your profit? be?

c. Draw a payoff diagram showing the amount you owe 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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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92843550

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