Question
In: Finance
Graph the pay-off and profit from writting a European put option with option price (premium)=$10, strike...
Graph the pay-off and profit from writting a European put option with option price (premium)=$10, strike price=$50. Also calculate the intrinsic value of this option if the stock price is $45
Solutions
Expert Solution
Payoff of a short put = -max(X - St, 0)
Profit = Payoff + Put premium
X = $50
St = 45
Intrinsic value of the put option when St < X = X - St = 10 - 5 = $5
Screenshot with formulas
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jeff jeffy answered 1 year agoRelated Solutions
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