4. A trader has the following portfolio:

Long 1-year put with strike $80

Short 1-year call with strike $120

Long 1 share of stock. (Option contracts are for 1 share).

Assume that the price of the underlying asset is $100. Volatility is 20%, rate=1%, dividend yield 0%.

a. Calculate the value of the portfolio.

b. What would be the maximum gain that the trader could incur in a month? Explain how.

c. What would be the maximum loss the trader could have in 1 month? Explain.

4. A trader has the following portfolio: Long 1-year put with strike $80 Short 1-year call with strike $120 Long 1 share of stock. (Option contracts are for 1 share). Assume that the price of the underlying asset is $100. Volatility is 20%, rate=1%, dividend yield 0%. a. Calculate the value of the portfolio. b. What would be the maximum gain that the trader could incur in a month? Explain how. C. What would be the maximum loss the trader could have in 1 month? Explain