At the LIFFE, BA stock is currently trading at 434p, and the January 420 puts are trading at 39p. If you buy one of these puts today and hold on to it until expiry
a) what will be the price of the stock at expiry that will allow you to break-even?
b) What will be your maximum gain?
c) What will be your maximum loss?
d) Please answer again questions a-c for a writer of this put
e) if at the January expiry of the option BA stock settles 10% below its current price, what will be the profit for the put buyer? What about the put writer?
f) Draw the profit graph at expiry for a seller of this put.