Problem 17: Option (15\%) The stock price of Tesla (TSLA) is trading at $290 per share in the beginning of Jan 2023. You heard that TSLA intend to build plants which will cost $10 billion in Mexico. Yet the plan has not been formally approved by the government of Mexico but the result will be known 3 months later. If the plan is approved, it will cause a large rise of TSLA's price (likely $300$370 ). However, if the plan is rejected, it is likely that TSLA's price will slump largely (likely $210260 ) due to the huge sunk cost in the preparation stage. Suppose there are following European equity options (with 3-month maturity from now) available in the market. Design an option strategy which is likely to utilize this opportunity. 1.Describe what your strategy is and draw the payoff graph (Hint: think of a strategy we learned in class). 2. Calculate your returns when TSLA price rises to (i) $350 (ii) $230; 3. What are the break-even prices of this strategy