Draw the payoff diagram at maturity for the put option and the call option. The put option has a strike price of $40, and it trades for $2. The call option has a strike price of $45, and it trades for $1.
Homework AD 717 Week 11 Problem 1. An investor buys a European style put option. The stock price is $42 and the strike price is $40. The option has ninety days until maturity. The risk-free rate stands at 1.6%, and the volatility of the stock returns is 49%. a) What is the price of the […]