A three-month call with an exercise price of $25 costs $2. A three-month put with an exercise price of $20 costs $3. A trader uses the options to create a strangle. Assume that both call and put options have the same underlying stock and the same expiration date. The trader creates a strangle by buying the call and the put options. Assume that options are exercised if they are in-the-money. Ignore the time value of money. Find the profit (or loss) from the strangle strategy for the stock price range below. ST in the table stands for stock price at time T.

_______________________________________ Stock price range Profit or loss _______________________________________ ST $20 $20 ST $25 ST 25 _______________________________________