Consider these four option strategies: 

(i) Buy a call; 

(ii) Write a call; 

(iii) Buy a put; 

(iv) Write a put.

a. For each strategy, plot both the payoff and profit diagrams as a function of the final stock price.

b. Why might one characterize both buying calls and writing puts as “bullish” strategies? What is the difference between them?

c. Why might one characterize both buying puts and writing calls as “bearish” strategies? What is the difference between them?