1. Draw the payoff and profits of this strategy: (30 points)
   1. You establish a straddle on Walmart using September call and put options with a strike price of $50. The call premium is $4 and the put premium is $5. What are the breakeven points?
      1. Upper break-even level = $50 + ($5+$4) = $59

Lower break-even level = $50 - ($5+$4) = $41

2. You want to lower your total cost. Following the previous straddle strategy, additionally, you sold a $60 call for $2 premium and sold another $20 put for $1 premium. Draw the payoff and profit of this butterfly strategy. What are the breakeven points?
3. Currently you long Walmart stock and the price is $50/share. You want to lock in your return for a month:
   1. You created a zero-collar strategy by shorting a call with a strike price of $52 for $1 premium and long a put with a strike price of $48 for $1 premium. Draw the pay off and profit of this strike. What are the worst los and the most gain you could have?
   2. You entered an equity swap as the part that will pay the total return of Walmart stock and will receive LIBOR rate (2% annually). Assume that you have 1 million dollars in Walmart. This month the return for Walmart is -5%. Show graphically how Equity SWAP works and how much money (in dollar amount) will you receive at the end of the month?

I only need the answer for B.

Thank you!