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Draw a payoff diagram showing the value of the call

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Reference no: EM131789578

Part -1:

You own a call option on Intuit stock with a strike price of $40. The option will expire in exactly 3 months' time.

a. If the stock is trading at $55 in 3 months, what will be the payoff of the call?

b. If the stock is trading at $35 in 3 months, what will be the payoff of the call?

c. Draw a payoff diagram showing the value of the call at expiration as a function of the stock price at expiration.

Part -2:

You own a put option on Ford stock with a strike price of $10. The option will expire in exactly 6 months' time.

a. If the stock is trading at $8 in 6 months, what will be the payoff of the put?

b. If the stock is trading at $23 in 6 months, what will be the payoff 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.

Reference no: EM131789578

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