Use the spreadsheet from the Excel Application boxes on spreads and straddles (available at www.mhhe.com/bkm; link to Chapter 15 material) to answer these questions.

a. Plot the payoff and profit diagrams to a straddle position with an exercise (strike)

price of $130. Assume the options are priced as they are in the Excel Application.

b. Plot the payoff and profit diagrams to a spread position with exercise (strike) prices of $120 and $130. Assume the options are priced as they are in the Excel Application. LO.1