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I. Consider the following option strategy. Note: All options are European option. Long one put option with X-price $1.12/ at a premium of $0.04 Short
I. Consider the following option strategy. Note: All options are European option. Long one put option with X-price $1.12/ at a premium of $0.04 Short another put option with X-price $1.09/ at a premium of $0.01 1. Plot the payoff chart of the option strategy above (35 points). 2. Mark all break-even points (lower break-even point and upper break-even point) (5 points) 3. Write up the maximum net profit and loss on the grid paper (5 points). 4. Name the above option strategy (5 points). II. Consider the following option strategy. Note: All options are European option. Short one call with X-price $1.06/ at a premium of $0.05 Long two calls with X-price $1.09/ at a premium of $0.02 each Short one call with X-price $1.12/ at a premium of $0.01 1. Plot the payoff chart of the option strategy above (35 points). 2. Mark all break-even points (lower break-even point and upper break-even point) (5 points) 3. Write up the maximum net profit and loss on the grid paper (5 points). 4. Name the above option strategy (5 points). I. Consider the following option strategy. Note: All options are European option. Long one put option with X-price $1.12/ at a premium of $0.04 Short another put option with X-price $1.09/ at a premium of $0.01 1. Plot the payoff chart of the option strategy above (35 points). 2. Mark all break-even points (lower break-even point and upper break-even point) (5 points) 3. Write up the maximum net profit and loss on the grid paper (5 points). 4. Name the above option strategy (5 points). II. Consider the following option strategy. Note: All options are European option. Short one call with X-price $1.06/ at a premium of $0.05 Long two calls with X-price $1.09/ at a premium of $0.02 each Short one call with X-price $1.12/ at a premium of $0.01 1. Plot the payoff chart of the option strategy above (35 points). 2. Mark all break-even points (lower break-even point and upper break-even point) (5 points) 3. Write up the maximum net profit and loss on the grid paper (5 points). 4. Name the above option strategy (5 points)
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