Question

Please write the profit diagram of a short call. Suppose this call has a strike price of K dollars, where K equals to the total number of letters in your first and last name. For example, if your name is Warren Buffett, then K=13 Dollars. Assume the up-front option cost is $3 and stock price ranges from 0 to $20.  

Answer 1

Lets assume strike price to be 10$, and premium = 3$

Call option gives it's holder right to buy underlying at sppecified price in future by paying upfront premium

Here call option is shorted hence one will receive premium of $3

Statement showing payoff

Price as at expiry	Loss on exercise of call option (Strike price =$10)	Premium received	Net profit/loss
0	0	3	3
1	0	3	3
2	0	3	3
3	0	3	3
4	0	3	3
5	0	3	3
6	0	3	3
7	0	3	3
8	0	3	3
9	0	3	3
10	0	3	3
11	-1	3	2
12	-2	3	1
13	-3	3	0
14	-4	3	-1
15	-5	3	-2
16	-6	3	-3
17	-7	3	-4
18	-8	3	-5
19	-9	3	-6
20	-10	3	-7

Profit diagram