As a hedge fund manager, you have a bearish view on Tesla Inc. shares (NASDAQ: TSLA) for the following 2 months given the uncertainties related to the Covid-19. Assuming Tesla Inc is currently trading at $467.00, the put options with a maturity of two month and an exercise price of $442 per share, have a premium (cost) of $1.5 per share. The call option with a maturity of two month and an exercise price of $487 per share, have a premium (cost) of $3 per share.

a. Calculate the cost if you purchase 1,000,000 of the above put options.

b. Determine the share price for Tesla shares at which you would choose to exercise the above put options.

c. Determine the share price for Tesla shares at which the decision to purchase the above put options effectively breaks even for the fund manager.

d. If you dont own any shares, but you still want to make profits during this period. How can you use put and call options to take advantage of the fall in the share price?