1. Suppose the current price of a stock is 100, and you believe that two months from now, the stock price will be very likely to go up. You observe the following European call options expiring in two months available for trading in the market:

Strike Price Call Premium

100 9 110 5

You want to use a strategy using the above call options to capture the profit from a rise of the stock price. However, due to budgeting constraint, you want to lower the cost of the strategy by sacrificing some of the profit when the stock price goes up. Ultimately, the strategy only gives a constant profit when the stock price is above or below certain thresholds. Suppose the continuously compounded risk-free interest rate is 5% per year.

Name the portfolio strategy you should hold. Find the breakeven price of the strategy at expiration.