Final answer:
When writing a put option, you are selling the right to sell the stock at a specific price, while buying a put option means purchasing the right to sell the stock at a specific price. To plot the value of the portfolio, calculate the value of each option separately and subtract the value of the written put option from the bought put option. To plot the profit, calculate the profit for each option and add them together.
Step-by-step explanation:
When you write a put option, you are essentially selling the right to sell the stock at a specific price. In this case, you write a put option with an exercise price of $90. On the other hand, when you buy a put option, you are purchasing the right to sell the stock at a specific price. In this case, you buy a put option with an exercise price of $95.
To plot the value of the portfolio at the expiration date of the options, you need to calculate the value of both the written put option and the bought put option separately, and then subtract the value of the written put option from the value of the bought put option.
To plot the profit of the portfolio, you need to consider the difference between the exercise prices of the two options and the premiums paid/received for each option. First, calculate the profit for each option separately by subtracting the premium paid/received from the difference between the exercise price and the stock price at expiration. Then, add the profits from both options together to get the total profit.