Problem 1/ For risk management purposes, Bayan decided to undertake a strategy consisting of selling a put with a strike price of 22.1098 for 2.11, selling a put with a strike price of 18.2451 for 0.56, and buy two puts with a strike price of 20.8931 for a total of 2.2488. She entered this position with 5000 contracts each contract containing 100 strategies that would expire in 3 months from now.

A/ What is the amount of her max loss?

QUESTION 2

b/ What is her gain/loss if the stock price in 3 months is 19.145?

-67,910

18,982

-56,238

88,717

47,630

19,872

QUESTION 3

c/ What is her gain/loss if the stock price in 3 months is higher than the medium strike price by 350 basis points?