Question 28

An investor makes a strap strategy using the following asset when spot price of underlying is $45.

European put with strike $45 for $3.

European put with strike $55 for $4.0.

European call with strike $45 for $4.5.

European call with strike $45 for $3.5.

help me !!!!

Question 27

Jumbo Airline, a hypothetical company, will purchase 2.5 million gallons of jet fuel in one month and hedges using heating oil futures. Suppose that size of one heating oil futures is unknown. From historical data sigma subscript F=0.0325, sigma subscript s= 0.0295, and rho= 0.908. In addition, the spot price is 1.95 and the futures price is 1.98 (both dollars per gallon). What will be the size of heating oil futures if 4.51 heating oil futures are required for optimal hedge? please help me with this question its more important