A call option has an exercise price of $40 per share. If you bought the option for $3, draw a graph of the payout on the option as a function of the stock price. Label the graph.
Stock Price | Payoff from Call 40 Strike (A) | Cost of Call Option (B) | Profit/(Loss) (A-B) |
30 | 0 | 3 | -3 |
31 | 0 | 3 | -3 |
32 | 0 | 3 | -3 |
33 | 0 | 3 | -3 |
34 | 0 | 3 | -3 |
35 | 0 | 3 | -3 |
36 | 0 | 3 | -3 |
37 | 0 | 3 | -3 |
38 | 0 | 3 | -3 |
39 | 0 | 3 | -3 |
40 | 0 | 3 | -3 |
41 | 1 | 3 | -2 |
42 | 2 | 3 | -1 |
43 | 3 | 3 | 0 |
44 | 4 | 3 | 1 |
45 | 5 | 3 | 2 |
46 | 6 | 3 | 3 |
47 | 7 | 3 | 4 |
48 | 8 | 3 | 5 |
49 | 9 | 3 | 6 |
50 | 10 | 3 | 7 |
51 | 11 | 3 | 8 |
52 | 12 | 3 | 9 |
53 | 13 | 3 | 10 |
54 | 14 | 3 | 11 |
55 | 15 | 3 | 12 |
56 | 16 | 3 | 13 |
57 | 17 | 3 | 14 |
58 | 18 | 3 | 15 |
59 | 19 | 3 | 16 |
60 | 20 | 3 | 17 |
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