Client Portfolio One of your best clients has just reached a current portfolio value of $10 million. Even though you and the client implemented a strategy to get to this milestone years ago, the client has a large amount of capital gains. A phone conversation with the client finds that they recently sold some real estate and dont want to incur any capital gains from their stock and bond portfolio. The Client has 60% in stocks and 40% in bonds. 1. Collar The S&P 500 index Create a collar position for your clients stock portfolio. The client portfolio has a .95 correlation with the S&P 500 Index. Make sure the collar conforms to IRS guidelines since the client does have substantial gains. The client needs this collar for at least three years until she has a lower tax bracket due to retirement. Use the Black Sholes calculator to find the value of the options. In addition, cut and paste, or snipping tool, the calculator output to the word doc. Use an average stock market volatility. 2. Bear Spread Problem Youve had a conversation about the stock market with your client. The client is worried about a decline in the market while you believe that the worst-case scenario is a 10% pullback from the 4,700 area. Based on this scenario, create a bearish spread using S&P 500 futures call options. Your answer needs to address. The reasons and calculations for each strike price. You must detail the moneyness and the reasons why. 3. Volatility Problem The Federal Reserve Bank has been recently challenged with inflation worries coupled with supply chain and labor shortage issues. The stock market has recently fallen off its highs with the VIX reaching above 30. With the VIX above 30, option prices are expensive. The ten-year average VIX is around 16, so stock market implied volatility is well above average. Create a straddle position that would take advantage of a decline in the VIX and a decline in S&P 500 Futures options implied volatility. 4. Covered Call For your clients portfolio create a covered call position for the entire stock portion of the portfolio. The key to any option strategy is the strike price positioning. Make a recommended covered call strategy for the stock portion of the portfolio. In your recommendation detail the reasons you chose the strike price and the moneyness. Again, use S&P 500 futures options 5. Interest Rate Hedge With the ten-year Treasury note yielding 1.49%, you expect interest rates to eventually rise to a 2.00% level. Hedge your clients entire bond portion of the portfolio using ten year note futures contracts. Get as close as you can and round down.