Question 4 (15 marks) Suppose Joey holds a share of SCB common stock, currently valued at $48. She is concerned that over the next few months the value of her holding might decline and she would like to hedge that risk by supplementing her holding with one of the following two option positions, all of which expire at the same point in the future. a. Complete a table similar to the following for each of the following positions: i. A long position in a put option with an exercise price of $45 and a premium of $2. (3 marks) ii. A short position in a call option with an exercise price of $45 and a premium of $4. (3 marks) In calculating combined terminal position value, ignore the time differential between the initial option expense or receipt and the terminal payoff. Expiration date option payoff Initial option premium Combined terminal position value Expiration date SCB stock price 25 30 35 40 45 50 55 60 65 70 75 b. Graph the combined terminal position value for each of the above hedged positions, using combined terminal position value on the vertical axis (Y) and SCB's expiration date stock price on the horizontal axis (X). (4 marks) Explain which of the two hedging strategies mentioned above is better if Joey's objective is also to enjoy the upside gain of the stock