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B) Imagine that even though VSTO is currently a target of takeover attempts of multiple companies, you are a strong believer that the acquisition will
B) Imagine that even though VSTO is currently a target of takeover attempts of multiple companies, you are a strong believer that the acquisition will not succeed and that the price of VSTO exactly one year from today will be unchanged compared to today's price. Create the simplest investment strategy that will allow you to profit based on your beliefs. You are allowed to do only the following: a) buy or sell ONE European call option analyzed above in part A(i) b) buy or sell ONE European put option analyzed above in part A(ii) c) buy or sell ONE share of VSTO at today's price I ABSOLUTELY DO NOT CLAIM YOU NEED TO DO ALL THREE ABOVE ACTIONS (ab.c)! ONE OR TWO MAY BE PERFECTLY SUFFICIENT! (i) Explain what exactly you will do in order to profit from your belief TODAY and why this is the right strategy (1-2 sentences) (ii) 1. VSTO price exactly 12 months from today = $5 2. VSTO price exactly 12 months from today today's price + $2 3. VSTO price exactly 12 months from today = $42 Assume there are three possible s
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