Question 2

Consider the following information on the options available on stock Netflix. You intend to buy one March maturity call option on company Netflixs stock with exercise price $280 and buy one March maturity put option on the same underlying asset with strike price $300. The information of the options on the stock of the company is as follows (use last price as the price of the options):

a) Graph the payoff and profit/loss of this portfolio at option expiration.

b) What will be the profit/loss on this portfolio if company ABC trades at $290 on the option maturity date?

c) Given the portfolio that you have constructed, what is most likely your view of the future for the price of Netflixs stock?