1.Imagine you discover somebody in the market is willing to buy a particular put option with a very high implied volatility. a. How would you take advantage of this opportunity? b. How would you hedge your position? Provide a profit and loss diagram for your total position.

Please provide a detailed explanation.

Imagine you discover somebody in the market is willing to buy a particular call option with a very high implied volatility. a. How would you take advantage of this opportunity? b. How would you hedge your position? Provide a profit and loss diagram for your total position.

Please provide a detailed explanation.