1. Suppose the current stock price is $27, time to maturity is 0.5 years, risk-free interest rate is 3% per year, the European put option strike prices K₁ = 25 is $1.75 and K₂ = 30 is $4.50.
   1. Draw a bullish vertical spread by buying the put option strike prices K₁ and selling the put option with strike price K₂ = 30. Highlight the breakeven points, maximum profit and loss for this payoff diagram.
   2. Is the above trading strategy profitable to an investor who is pessimistic about the underlying stock? Explain (show all the steps with formula)