Question # $6$

Following market quotes are available to an investor for same maturity:

Strike Price Option Price

Call Option Put Option

$$32$ $$3\mathrm{.}5$ $$1\mathrm{.}1$

$$40$ $$3\mathrm{.}1$ $$1\mathrm{.}5$

$1.$ Construct a Straddle for the investor with strike price $$32.$

$2.$ What will be the cost of the strategy?

$3.$ What will be the payoff of the strategy if spot price of the underlying asset is $$45?$