Look at Figure 23.8, which shows the possible future payoffs in June 2016 from a particular package of investments in Alphabet options. Incidentally, this package of investments is called a "straddle" by option buffs.
FIGURE 23.8 This strategy provides a payoff of $0 if the Alphabet stock price remains at $750 and a payoff of $750 if Alphabet's stock price either falls to zero or rises to $1,500. See Problem 9.

a. What package of investments would provide you with this set of payoffs?
b. How much would the package have cost you in December 2015? (See Table 23.2.)
c. Would it have made sense to hold this package if you thought that the price of Alphabet stock was unlikely to change much?

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드 $750 te a. 5750 $1,500 Alphabet's stock price in June