Essentials of Business Analytics 1st Edition by Jeffrey Camm,James Cochran,Michael Fry,Jeffrey Ohlmann ,David Anderson

Exercise 18

Consider again Problem 13. The point of purchasing a European option is to limit the riskof a decrease in the per-share price of the stock. Suppose you purchased 200 shares of the stock at $28 per share and 75 six-month European put options with an exercise price of $26. Each put option costs $1.
a. Using data tables, construct a model that shows the value of the portfolio with options and without options for a share price in six months between $15 and $35 per share in increments of $1.00.
b. Discuss the value of the portfolio with and without the European put options.