Question

Draw the payoff diagram of an option that consists of 1 call (E=10) plus 1 put (E=15).

Please draw the diagram with an explanation. Thank you!

Answer 1

	Payoff for buying one Call at Strike price=10
	Price at expiration =S
	If S<10 or S=10,
	Payoff =0
	If S>10
	Payoff =S-10
	Payoff for buying one Put at Strike price=15
	Price at expiration =S
	If S>15 or S=15,
	Payoff =0
	If S<15
	Payoff =15-S
	S	A	B	C=A+B
	Price at expiration	Pay off of Call	Pay off of Put	Net Payoff
	3	0	12	12
	4	0	11	11
	5	0	10	10
	6	0	9	9
	7	0	8	8
	8	0	7	7
	9	0	6	6
	10	0	5	5
	11	1	4	5
	12	2	3	5
	13	3	2	5
	14	4	1	5
	15	5	0	5
	16	6	0	6
	17	7	0	7
	18	8	0	8
	19	9	0	9
	20	10	0	10
	21	11	0	11
	22	12	0	12