2. The SPDR S&P 500 ETF (SPY) is trading for $168.27/share on March 7. An investor is raising capital to purchase shares of SPY in the future. The investor expects to purchase 500 shares before the end of June. To hedge the cost of the future purchase, the investor sells 5 SPY 162 put contracts for $3.80/share, and purchases 5 SPY 170 call contracts for $3.90/share. a. What is the net cost of the 'range-forward' hedge? b. The investor plans to purchase SPY because the investor thinks shares are currently undervalued. However, the investor will not have capital to make the purchase until a later date. Explain the risk the investor faces without the range forward hedge. c. Explain a potential downside to the range forward hedge d. Complete the table below. The table details the net cost of purchasing 500 shares of SPY prior to the end of June. Mark cash outflows or costs as negative, and cash inflows or profits as positive values. SPY Spot @ expiration $145 $165 $200 CF from purchasing 500 shares SPY $72,500 -$82,500 P/L short 162 put $6,600 $1,900 P/L long 170 call $1,950 $1,950 Net CF -$81,050 $82,550