Q26

Q3 1) Option trading strategy (8 marks)

Jacob wrote one call option and one put option on FFC Corp shares. These two options have the same exercise volume and expiration date, but different exercise prices. Both options are European options. Information on the options can be found in the table below:

Option Type	Exercise Price	Premium
Call	28	$1.20
Put	24	$1.80

a). What is the maximum profit of this trading strategy? Is there a maximum loss? Explain. (4 marks)