Question 2. (This question has three parts: I, II and III)

Assume current stock price is $30, analyze and compare the following two trading strategies: (a) One share and a short position in two call options and (b) One share and a short position in four call options. All options have same strike price $32 and same expiration. Each option has a value $1.

Part I.

Showing the variation of an investors profit and loss at option expiration by using the provided table:

Strategy (a)
Long one share	ST32	ST>32
Short two calls
Payoff
Profit
Strategy (b)
Long one share
Short four calls
Payoff
Profit

Part II.

List the maximum profits and its corresponding stock prices, and break-even points for both strategies.

Part III.

Under what scenario(s), strategy (b) outperforms strategy (a).