4. 4.

Put and call payoffs [LO 23.4] Suppose a financial manager buys call options on 50 000 barrels of oil with an exercise price of $57 per barrel. She simultaneously sells a put option on 50 000 barrels of oil with the same exercise price of $57 per barrel. Consider her gains and losses if oil prices are $52, $55, $57, $59 and $62. What do you notice about the payoff profile?