The common stock of Tesla is currently trading at $685 per share. There are rumors that Tesla could be bought by Amazon. Tesla is not expected to pay any dividends for the foreseeable future. You believe that if the merger goes through, Teslas stock price will rise significantly, but if this merger fails, the stock price will fall significantly. You want to profit from either outcome. The risk-free rate is currently at 2% and a 3-month at-the-money (ATM)[1] put option on Tesla is selling on CBOE for $4.

1. What is the current price of a 3-month European at-the-money (ATM) call option on Tesla?
2. Propose a strategy to take advantage of your beliefs that uses the above mentioned put and call options. That is the strategy that allows you to profit from both: the significant price increase and decrease. Your answer should include the payoff table for your strategy and the graph of the strategys payoff and profit as a function of Teslas stock price.

[1] An option is at-the-money when its strike price is the same as the current price of the underlying asset, on which this option is written.