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a) A company which had experienced a serious hit during the currency crisis appears headed for imminent failure. The company has approached the government for

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a) A company which had experienced a serious hit during the currency crisis appears headed for imminent failure. The company has approached the government for a financial assistance. If the firm receives the assistance, the stock price is likely to increase substantially; otherwise a huge fall in stock price is likely. Based on the information below, outline two appropriate option strategies. Show both of your strategies in a table and diagram respectively. The stock is currently trading at RM7.00. 90-day calls 7.00 call @ 0.26 7.50 call @ 0.09 90-day puts 7.00 put @ 0.18 7.50 put @ 0.34 (14 marks)

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