Payoff and net profit diagram with ibm share price

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Suppose that price of IBM stock is $200 and you think IBM stock is going to appreciate substantially in value in the next three months. So you bought a share of IBM at $200. To hedge your downside risk, you also bought a put option on IBM stock that allows you to sell a share of IBM stock at $190 in three months. You paid $10 for the put option. Draw the payoff and net profit diagram with the IBM share price in three months on the X axis.

Reference no: EM131935515

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