Financial Mathematics

1) Construct a Portfolio using combinations of shares and call options with exercise price $150. The current market price for a share is $50 and call options with exercise price $150 have a market price of $40. The final portfolio must meet the following requirements: - Initial investment to be 0 - Portfolio should make as much profit for large values of ST - No losses higher than $1400 State the portfolio that fits the requirements and sketch the resulting payoff to maturity. 1) Construct a Portfolio using combinations of shares and call options with exercise price $150. The current market price for a share is $50 and call options with exercise price $150 have a market price of $40. The final portfolio must meet the following requirements: - Initial investment to be 0 - Portfolio should make as much profit for large values of ST - No losses higher than $1400 State the portfolio that fits the requirements and sketch the resulting payoff to maturity