1- We buy common shares for $20 a share. In order to protect our position, we may invest in options. We may buy (or sell) put options at $1 premium for an exercise price of $22 with an expiration of six months. We also may invest in call options, which cost 1.5 with the same expiration date. What is prudent to do, in case we predict the stock market will crash.

2- We buy stock as above with the same data given, describe the best policy to undertake if we expect a substantial market increase.