Suppose you construct an option strategy consisting of a long position in one put option with price P=$10 and exercise price X1=$80, and a long position in one call option with price C=$20 and identical expiration date and underlying stock, but higher exercise price X2=$105.

1. Draw a diagram of the profit of this strategy. (5 marks)

2. What is the maximum loss for this strategy? For which values of the underlying stock price it is achieved? (5 marks)

3. Suppose that at expiration the stock price is ST=$140, what is the profit of the strategy at time T? (5 marks)

4. Describe the characteristics of an investor who would like to sell this option strategy. (5 marks)