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Ms. D. Pais, an investor, also contacted you for financial advice. She expects very high volatility for soybeans within the next twelve months, which
Ms. D. Pais, an investor, also contacted you for financial advice. She expects very high volatility for soybeans within the next twelve months, which is based on her view on the outlook for East Asian economies. Soybeans' last closing price was at 560, and implied volatility was 10% for a twelve-month option. The interest rate was at 1.5% a month. Currently, options on the underlying asset are trading at: Strike Price 535 540 545 550 555 560 565 570 575 580 585 call 150.77 148.15 145.57 143.03 140.51 138.04 135.60 133.19 130.82 128.48 126.18 put 38.24 39.80 41.40 43.04 44.71 46.42 48.16 49.93 51.74 53.59 55.47 a. Explain three strategies that Ms. D. Pais can implement to profit from her view on the market.
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