1.	An options investor just wrote a call option at a strike price of $70 and also wrote a put option at a strike price of $60 on the same underlying common stock. Both options expire 40 days from now. At the time of writing these options, the price of the call option was $7 and the price of the put option was $6.
a.	(20 points) In the space immediately below, write the profit expression for the writer of the call option as a function of the underlying stock price at expiration. Repeat for the writer of the put option. Then calculate the profit on the written call, the written put, and the total combined profit for underlying stock prices at expiration ranging from $30 to $100 with $2 increments. Please copy your results in the table provided on the next page. (You may cut and paste an Excel file, but make sure it has the exact same layout with the same strike prices.)

ST	Profit: Write 1 Call @ X = 70	Profit: Write 1 Put @ X = 60	Combined Profit
30
32
34
36
38
40
42
44
46
48
50
52
54
56
58
60
62
64
66
68
70
72
74
76
78
80
82
84
86
88
90
92
94
96
98
100

b.	(10 points) Graph the results for underlying stock prices at expiration ranging from $30 to $100. Show the profit graph for the written call, the written put and then for the combined position.

c.	(5 points) What is the net investment at time 0?

d.	(5 points) Calculate any stock prices at expiration where this strategy would breakeven. Write a formula to determine any breakeven stock prices at expiration.

e.	(5 points) What is the maximum profit? At what underlying stock price(s) does this maximum profit occur?

f.	(5 points) What is the maximum loss? (You should consider possible losses at underlying stock prices that are outside the range provided in the table)

2.	An options investor just bought a put option a strike price of $60 and simultaneously wrote a put option at a strike price of $50 on the same underlying common stock. Both options expire 30 days from now. The price of the put option at the $60 strike price was $5.50; the price of the put at the $50 strike price was $2.15.
a.	(20 points) In the space immediately below, write the profit expression for each put option as a function of the underlying stock price at expiration. Then calculate the profit on both puts and the total combined profit for underlying stock prices at expiration ranging from $30 to $80 with $2 increments. Please copy your results in the table provided on the next page. (You may cut and paste an Excel file, but make sure it has the exact same layout with the same strike prices.)

ST	Profit: Buy 1 Put @ X = 60	Profit: Write 1 Put @ X = 50	Combined Profit
30
32
34
36
38
40
42
44
46
48
50
52
54
56
58
60
62
64
66
68
70
72
74
76
78
80

b.	(10 points) Graph the results for underlying stock prices at expiration ranging from $30 to $80. Show the profit graph for the written call, the written put and then for the combined position.

c.	(5 points) What is the net investment at time 0?

d.	(5 points) Calculate any stock prices at expiration where this strategy would breakeven. Write a formula to determine any breakeven stock prices at expiration.

e.	(5 points) What is the maximum profit? At what underlying stock price(s) does this maximum profit occur?

f.	(5 points) What is the maximum loss? (You should consider possible losses at underlying stock prices that are outside the range provided in the table)