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A trader sells a European call option on a share for 4 SEK. The stock price...

  1. A trader sells a European call option on a share for 4 SEK. The stock price is 47 SEK and the strike price is 50 SEK. Under what circumstances does the trader make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variation of the trader’s profit with the stock price at the maturity of the option.

Please carefully label: Breakeven point, profit, loss and don't forget the diagram.. thanks in advance!

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Answer #1

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