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Consider the following information for a non-dividend paying stock: Current stock price = 46.20 Call price Exercise Price Put price 7.03 40.00 0.83 5.24 42.50

Consider the following information for a non-dividend paying stock:

Current stock price = 46.20

Call price Exercise Price Put price
7.03 40.00 0.83
5.24 42.50 1.54
3.76 45.00 2.56
2.61 47.50 3.90

a) Calculate the maximum profit of a covered call strategy using nearest out-of-the-money options.

b) Calculate the maximum loss of a collar strategy using nearest out-of-the-money options.

c) Calculate the value of a butterfly spread that peaks at S T = 45.00.

d) Estimate the maximum value of a strategy that pays $1 if the future stock price is between $42.50 and $45.00.

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