Suppose you are trading derivatives on silver and you simultaneously execute the following transactions: Sell a forward contract at a price of $4.57/oz,. sell a put option with an exercise price of $4.50/oz., and buy two call options with an exercise price of $4.60/oz. The size of each contract is 5,000 ounces, the options are European style, and all of the contracts expire on December 31.

Complete the following table to show how the payoff for your net position depends on the spot price of silver on December 31:

Silver price on December 31 (Sr)

Transaction Sr < 4.50 4.50Sr< 4.60 Sr 4.60

Forward contract

X = 4.50 put option

X = 4.60 call options

Net position