Propose an example of each and: a) Make the graphs, and tabulate the payment of an...

Propose an example of each and:

a) Make the graphs, and tabulate the payment of an option contract: (call)

b) Make the graphs, and tabulate the payment of an option contract: (put)

Solutions

Expert Solution

Call Option

Value of Call Option = If strike price < Market price then Profit = Market Price - Strike price - Premium Paid, else -Premium Paid

Let Strike Price = 100, Premium Paid = 10, then

Value of Put Option = If strike price > Market price then Strike price - Market Price - Premium Paid, else -Premium Paid

jeff jeffy answered 1 year ago

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