The common stock of the BDF Corporation has been trading in a narrow range around $100 per share for months, and you believe it is going to stay in that range for the next month. The price of a one-month call option with an exercise price of $105 selling for $3, while a one month put option with an exercise price of $96 and the same expiration date is selling for $2.50.

a) What options strategy, using both put and call options, could you use to exploit your conviction about the stock prices future movement?

b) What is the most money you can make on the position?

c) What is the most you could lose on this position?

d) Is there any way to cover the losses by taking a hedged position? Explain.