What is a put option?

Posted: January 10th, 2022

(a) What is a put option?

(b) By entering into this option strategy, explain whether the superannuation fund will exercise the option if the spot price is above or below the exercise price.

(c) Draw a fully labelled diagram of the put option showing the profit and loss profile of the option buyer and the writer of the option (including the break-even price). (LO 18.5)

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