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Math Help - Sketching a Payoff Function

  1. #1
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    Sketching a Payoff Function

    I am required to sketch a payoff function, as follows:



    I'm baffled. I've tried, a lot, but this confuses the heck outta me.

    Any kind souls who could give me some pointers?
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  2. #2
    Senior Member
    Joined
    Nov 2010
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    Hong Kong
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    the X axis will be S_t variable axis, the Y axis is the payoff
    plot two points on X axis: K_1, K_2 and consder tihe behaviour of S_t variable around these two points (before, in between, after)
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