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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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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