Question

A put option has an exercise price of $50 per share. Suppose you sell the option for $2. Draw a graph of the payout on the option as a function of the stock price. Label the graph.

Answer 1

Stock Price	Payoff from put 50 Strike (A)	Cost of Put Option (B)	Profit/(Loss) (A-B)
36	14	2	12
37	13	2	11
38	12	2	10
39	11	2	9
40	10	2	8
41	9	2	7
42	8	2	6
43	7	2	5
44	6	2	4
45	5	2	3
46	4	2	2
47	3	2	1
48	2	2	0
49	1	2	-1
50	0	2	-2
51	0	2	-2
52	0	2	-2
53	0	2	-2
54	0	2	-2
55	0	2	-2
56	0	2	-2
57	0	2	-2
58	0	2	-2
59	0	2	-2
60	0	2	-2
61	0	2	-2