9.

a. I have a long position in a put option on with an exercise price of $2.2/ and a long position in a call option on with an exercise price of $2.4/. I paid $0.10/ for each option. Draw the combined graph. What is the name of this strategy?

b. I have a short position in a put option on with an exercise price of $2.2/ and a short position in a call option on with an exercise price of $2.4/. I received $0.15/ for each option. Draw the combined graph. What is the name of this strategy?

c. If I have both of these strategies together (part a and part b), how will my combined (4 options) graph look like? What is my loss/profit if ST = $1.8/? What is my loss/profit if ST = $2.5/?

d. Did I make a good or a bad decision when I combined both strategies? What is the advantage or disadvantage of combining these two strategies?