A call option on Santos Limited shares with an exercise price of $7.25 per share, expiry in two months, is currently trading at $0.70. The put option with the same exercise price and date is trading at $0.95.

1. Your friend is very excited. He found an easy way to get rich: Long a put and a call with the same strike price and one of them will always be in the money!!!! You can use your pay-off diagram(s) to explain the error in his plan.
2. Beyond which share prices does your friends strategy become profitable?