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10. You are creating a Straddle long position by buying a stock call option and a stock put option simultaneously. The two options have the

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10. You are creating a Straddle long position by buying a stock call option and a stock put option simultaneously. The two options have the same strike price at $40 per share. The call premium is $3 per share and the put premium is \$6 per share. Please solve for: (a) the profit/loss of the straddle position at per share level, if the stock price becomes $70 (4 points) (b) the profit/loss from the call option only at per share level, if the stock price bec $30 (4 points) (c) the Break-Even points of the straddle position (Extra credit 2 points). (d) What are the pros and cons of a long straddle position compared to a long strangle position? (Extra credit 2 points) (e) Please construct Excel diagrams separately for longing the put option, the call option and the straddle position. The X axis is the stock price while the Y axis is the profit of the position (copy and paste the diagrams into this Word file is okay). (6 points) 10. You are creating a Straddle long position by buying a stock call option and a stock put option simultaneously. The two options have the same strike price at $40 per share. The call premium is $3 per share and the put premium is \$6 per share. Please solve for: (a) the profit/loss of the straddle position at per share level, if the stock price becomes $70 (4 points) (b) the profit/loss from the call option only at per share level, if the stock price bec $30 (4 points) (c) the Break-Even points of the straddle position (Extra credit 2 points). (d) What are the pros and cons of a long straddle position compared to a long strangle position? (Extra credit 2 points) (e) Please construct Excel diagrams separately for longing the put option, the call option and the straddle position. The X axis is the stock price while the Y axis is the profit of the position (copy and paste the diagrams into this Word file is okay). (6 points)

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