The common stock of TSL has been trading around $70 recently. Mike believes the price is going to make a major move in the next two months but is uncertain as to the direction. He gathers the following TSL option price data:

a. Construct a simple option strategy to exploit Mikes conviction about TSL stock price future movements. (2 marks)

b. Determine the maximum possible loss per share at maturity for the option strategy. (3 marks)

c. Determine the breakeven stock price(s) at maturity for the option strategy. (4 marks)

d. Draw a well-labelled profit and loss diagram at maturity for the option strategy. (5 marks)

Option Price Strike Time to expiration Call $2.4 $70 2 months from now Put $0.6 $70 2 months from now Option Price Strike Time to expiration Call $2.4 $70 2 months from now Put $0.6 $70 2 months from now