before you make any recommendation regarding strategies, Harrison would like you to first conduct an analysis of various options trading strategies that he is considering for the three companies: company DZI, company YWQ, and company FDX. On July 2, 2018, you gather selected option premium data on these companies, which is presented in Table 1.

Table 1

Company	Share Price	Call Premium	Expiration /Strike	Put premium
DZI	93.93	9.45	September/87.50	1.67
		2.67	September/95.00	4.49
		1.68	September/97.50	5.78
YWQ	28.49	4.77	September/24.00	0.35
		3.96	September/25.00	0.50
		0.32	September/31.00	3.00
FDX	74.98	0.23	July/80.00	5.52
		2.54	September/75.00	3.22
		2.47	December/80.00	9.73

The following are option strategies Harrison is considering:

Strategy 1: Constructing a synthetic long put position in DZI.

Strategy 2: Buying 100 shares of DZI and writing the September 95.00 strike call option on DZI.

Strategy 3: Implementing a covered call position in DZI using the September 97.50 strike option.

Strategy 4: Implementing a protective put position in YWQ using the September 25 strike option.

Strategy 5: Buying 100 shares of YWQ, buying the September 24 strike put option, and writing the September 31 strike call option.

Strategy 6: Implementing a bear put spread in YWQ using the September 25 and September 31 strike option.

Strategy 7: Writing both the September 75 strike call option and September 75 strike put option on FDX.

For your first task, you need to answer the following questions for Harrison. Assume options are held to maturity and there are no transaction costs or dividends. If there are any other assumptions you need to make, please indicate in your response.

Part I

How will you construct Strategy 1 (i.e. a synthetic long put option)? Please provide an example using the information provided in Table 1. Under what scenario will you recommend this strategy?

Based on Table 1, what do we call Strategy 2 in option strategies? What is the price range of DZI at option expiration in order to make Strategy 2 profitable? What price range of DZI at option expiration would make Strategy 2 incur a loss? Show your work. Under what scenario will you recommend this strategy?

What is the breakeven share price of Strategy 3? Show your work. Under what scenario will you recommend this strategy?

What is the maximum loss per share that would be incurred if Strategy 4 was implemented? Show your work. Under what scenario will you recommend this strategy?

What is Strategy 5 called? What is the advantage of using Strategy 5? Show your work.

What is the breakeven share price of Strategy 6? Show your work. Under what scenario will you recommend this strategy?

What is the maximum gain per share that would be incurred if Strategy 7 was implemented? Show your work. Under what scenario will you recommend this strategy?