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.

5. Bonus question. Assumptions are like in 4. The portfolio is:

Short 1-year call with strike $120

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

a. Price the portfolio. b. Under what scenarios will the trader make a profit by holding the portfolio for 1 year?

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. 5. Bonus question. Assumptions are like in 4. The portfolio is: Short 1-year call with strike $120 Long 1 share of stock. (Option contracts are for 1 share). a. Price the portfolio. b. Under what scenarios will the trader make a profit by holding the portfolio for 1 year