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Red Hat stock sells for 93. Three-month call options on Red Hat at 88 sell for 6.616. Three-month put options at 88 sell for 4.177.

Red Hat stock sells for 93. Three-month call options on Red Hat at 88 sell for 6.616. Three-month put options at 88 sell for 4.177. You can go long or short 175 units of any or all of these three assets. The interest rate is 2% per year.

A: Explain your arbitrage strategy. How much money will you make?

B: Now assume the price of Red Hat stock is 88. Explain your arbitrage strategy. How much money will you make?

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