Problem 4/ For risk management purposes, Ghaida decided to undertake a strategy consisting of buying a call with a strike price of $22, buying a call with a strike price of $16, and selling two calls with a strike price of $19 . The premiums for calls are: $1, $0.1, and $0.45. She entered this position with 8 contracts each containing 100 strategies that would expire in 3 months from now.

a/ What is the amount of her initial investment? b/ What is the amount of her max gain? c/ What is her gain/loss if the stock price in 3 months is $18.5 ?

d/ What is her (gain/loss) if the stock price in 3 months is lower than the medium strike price by 500 basis points?