Max Houck holds 700 shares of Boulder Gas and Light. He bought the stock several years ago at $52.08; and the shares are now trading at $78.50 Max is concemed that the market is beginning ib soften. He doesn't want to sell the stock, but he would like to be able to protect the profit he's made. He decides to hedge his position by buying 7 puts on Boulder Gst. The three-monch puts carry a strike price of $78.50 and are currenthy trading at $3.27. a. How much protit or loas will Max make on this deal if the price of Boulder GsL does indeed drop, to $61.50 a share, by the expiration date an the puts? b. How would he do if the stock kept going up in price and reached $85.00 a share by the expiration date? c. What do you see as the major advantages of using puts as hedge vehicles? d. Would Max have been better off using in-the-money puts- - that is, puts with an $69.00 strike price that are trading at $10.48 ? How about using out-of-the-money puts-say, those with a $71.00 strike price, trading at $1.00 ? Explain. a. If the price of Boulder G8L does indeed drop, to $61.50 a share, by the expiration date on the puts, Max wil have a proft (or lost) of $ (Round to the nearest cent.)