145 4 In January 2021, Company Monast's stock is traded at $150. The following table provides the premiums of March, April, and May maturity options with different strike prices on Company Monaslys stock. Based on the current market conditions, you would like to construct the following option trading strategy Long Strip using April maturity options. (Required. In parts be and A, use the values of strike and premium of the option's) that you select in part a) Calls Puts Strike March April May March April May 6 9 12 05 3 3 7.5 9.5 1.5 6 155 1.5 8.5 25 (a) Describe how to construct the strategy. Which call and/or put is (are) used? (b) Show the net payoff function of the strategy (e) Fill in the net payoff table. (Required show the net payoff of each option used to construct the strategy and the overal net payoff of the strategy) 150 4.5 6 3 9.5 (d) What are the maximal profit and the maximal loss of the strateg? (Required: show how to calculate the value(a) Wit is applicable) (e) When does the strategy make profit? (Required show how to caleulate the value(s) ir it is applicable) ( What is your expectation of Company Monasis stock price movement when you construct the strategy? () After constructing the above trading strate the share price is not changed, however your expectation is changed and you would like to construct a long straddle ineread Describe a shortcut way to construct the new strategy by adjusting the existing trading strategy, which call and/or put is (are) Used? Explain h) If you constructed a long Strap rather than a long Strip in January 2021 Explain when does the new strategy lead you a better outcome than the original one? if the stock price is changed to 160, how much more/less profit do you make for the new strategy compared to the original one? (Required show how to calculate the values) is applicable) 145 4 In January 2021, Company Monast's stock is traded at $150. The following table provides the premiums of March, April, and May maturity options with different strike prices on Company Monaslys stock. Based on the current market conditions, you would like to construct the following option trading strategy Long Strip using April maturity options. (Required. In parts be and A, use the values of strike and premium of the option's) that you select in part a) Calls Puts Strike March April May March April May 6 9 12 05 3 3 7.5 9.5 1.5 6 155 1.5 8.5 25 (a) Describe how to construct the strategy. Which call and/or put is (are) used? (b) Show the net payoff function of the strategy (e) Fill in the net payoff table. (Required show the net payoff of each option used to construct the strategy and the overal net payoff of the strategy) 150 4.5 6 3 9.5 (d) What are the maximal profit and the maximal loss of the strateg? (Required: show how to calculate the value(a) Wit is applicable) (e) When does the strategy make profit? (Required show how to caleulate the value(s) ir it is applicable) ( What is your expectation of Company Monasis stock price movement when you construct the strategy? () After constructing the above trading strate the share price is not changed, however your expectation is changed and you would like to construct a long straddle ineread Describe a shortcut way to construct the new strategy by adjusting the existing trading strategy, which call and/or put is (are) Used? Explain h) If you constructed a long Strap rather than a long Strip in January 2021 Explain when does the new strategy lead you a better outcome than the original one? if the stock price is changed to 160, how much more/less profit do you make for the new strategy compared to the original one? (Required show how to calculate the values) is applicable)