On November 1, 20-n, you notice the following bid-ask quotes in the option market (supposedly perfect otherwise!), the underlying asset being stock ABC:

Call 130 January: 11-12

Call 145 January: 7-8

Put 130 January: 8.5-9.5

Put 145 January: 16-17

ABC quotes 133 and the 3-month interest rate is 4% (proportional, annualized rate).

a) What arbitrage should you undertake (transaction costs are negligible, but you are not market-maker, so that you are subject to the bid-ask spread)?

b) Is it really riskless?

c) What is its IRR if you do not cancel, either by lending or by borrowing, the initial cash-inflow or outflow?