TEST BANK FOR An Introduction to the Mathematics of Financial Derivatives 2nd Edition By Salih N. Neftci

0 2 4 6 8 10 12 14 16 18 20 −20 −15 −10 −5 0 5 10 15 20 short stock short call combined position written call short stock short stock + short call FIGURE 0.1 Payo diagram for both a short sale of stock and an at-the-money call. i Payo diagram at expiration: 1 2 3 4 5 6 7 8 9 10 0 0.5 1 1.5 2 2.5 3 3.5 long put long call put + call FIGURE 0.2 Payo diagram for a long put with strike K1 and a long call with strike K2, K1 < K2. Payo diagram at expiratio...