Question #7: Option Strategies [18 Points] Suppose Mr. Wu purchases 1800 shares of Aurora Cannabis stock (ACB) for $11.87 and at the same time he also buys 18 put options that has a strike price of $15. The put option is currently selling for $4.20. (a) What is the option strategy that Mr. Wu has decided to employ? What would be the reason Mr. Wu would want to employ this strategy? [2 Points] (b) What is Mr Wu's total profit (or loss) from the option strategy if the price of the ACB stock is $10, $15 or $20 in 12 months? [8 Points] (c) At what price of the stock will Mr. Wu break even? [4 Points] (d) What is the maximum potential loss and maximum potential profit for Mr. Wu from this option strategy? [4 Points] Question #7: Option Strategies [18 Points] Suppose Mr. Wu purchases 1800 shares of Aurora Cannabis stock (ACB) for $11.87 and at the same time he also buys 18 put options that has a strike price of $15. The put option is currently selling for $4.20. (a) What is the option strategy that Mr. Wu has decided to employ? What would be the reason Mr. Wu would want to employ this strategy? [2 Points] (b) What is Mr Wu's total profit (or loss) from the option strategy if the price of the ACB stock is $10, $15 or $20 in 12 months? [8 Points] (c) At what price of the stock will Mr. Wu break even? [4 Points] (d) What is the maximum potential loss and maximum potential profit for Mr. Wu from this option strategy? [4 Points]