A companys stock has potential for an upward move in price, and you have no position whatsoever in the stock now. Your customer wish to take opportunity of any up movement in price but want to strictly limit your downside risk. The stock price now is RM5.00 per share. The following is the options choices.

Outline two possible strategies for your customer. For each strategy, you must state the position, graph the strategy, and the risk profile.

\begin{tabular}{|l|l|} \hline 30-day calls & 30-day puts \\ \hline 4.00 call @ 1.05 & 4.00 put @ 0.12 \\ \hline 5.00 call @ 0.50 & 5.00 put @ 0.35 \\ \hline 6.00 call @ 0.17 & 6.00 put @ 1.00 \end{tabular}