John has been trading in a narrow range around $50 per share for months, and you think it will stay in that range for the next two months. The price of a 2-month put option with an exercise price of $50 is $4 while the price of a 2-month call option with an exercise price of $50 is $5.

1. What would be a profitable simple option strategy using a put and a call to exploit your belief about the stock future price level?

2. How far can the stock price move in either direction before you lose money?