How to answer for part b

Problem 3. Assume European call and put options (with no limit on the strike price or number of options to trade) with a fixed maturity date on a stock with current price So = $50. (a) Find a combination of calls and puts that generates the following plot of payoff at maturity. (Write the equation of each line segment in your answer.) 35 20 Payoff 15 10 10 20 30 40 50 70 80 06 100 Stock price at maturity (S ) (b) Find an approximation to the following plot of a binary payoff at maturity. Provide some details and explanation. 20 15 Payoff 10 5 10 15 25 30 35 40 45 50 Stock price at maturity (S)