Donna Donie, CFA, has a client who believes the common stock price of TRT Materials $($currently $$58$ per share$)$ could move substantially in either direction in reaction to an expected court decision involving the company. The client currently owns no TRT shares, but asks Donie for advice about implementing a strangle strategy to capitalize on the possible stock price movement. A strangle is a portfolio of a put and a call with a higher exercise price but the same expiration date. Donie gathers the TRT option$-$pricing data:

Characteristic Call Option Put Option

Price $ $5$ $ $4$

Strike price $$60$ $$55$

Time to expiration $90$ days from now $90$ days from now

a$.$ Recommend whether Donie should choose a long strangle strategy or a short strangle strategy to achieve the client$$s objective.

multiple choice

Long strangle strategy Correct

Short strangle strategy

b$.$ Calculate, at expiration for the appropriate strangle strategy in part $($a$),$ the $($Enter your Break$-$even stock price$($s$)$ answers in ascending order. Enter all values as positive value. Omit the $"$$$"$ sign in your response.$)$

i$.$ Maximum possible loss per share $ $9$ Numeric Response Edit Unavailable. $9$ correct.

ii$.$ Maximum possible gain per share unlimited Correct

iii. Break$-$even stock price$($s$)$ $ Numeric Response Edit Unavailable. incorrect. and $ Numeric Response Edit Unavailable