Assume that you have shorted the put option.
a. If the stock is trading at $8 in three months, what will you owe?
b. If the stock is trading at $23 in three months, what will you owe?
c. Draw a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration.Assume that you have shorted the call option in Problem 2.
a. If the stock is trading at $55 in three months, what will you owe?
b. If the stock is trading at $35 in three months, what will you owe?
c. Draw a payoff diagram showing the amount you owe at expiration as a function of the stock price at expiration.
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