5. A stock is currently trading at a price of $80. You decide to place a collar on this stock.

You purchase a put option on the stock, with an exercise price of $75 and a premium of

$3.50. You simultaneously sell a call option on the stock with the same maturity and the same premium as the put option. This call option has an exercise price of $90.

A. Determine the value at expiration and the profit for your strategy under the following outcomes:

i. The price of the stock at expiration of the options is $92.

ii. The price of the stock at expiration of the options is $90.

iii. The price of the stock at expiration of the options is $82.

iv. The price of the stock at expiration of the options is $75.

v. The price of the stock at expiration of the options is $70.

B. Determine the following:

i. the maximum profit.

ii. the maximum loss.

iii. the stock price at which you would realize the maximum profit.

iv. the stock price at which you would incur the maximum loss.

C. Determine the breakeven underlying price at expiration of the put options.