The current price of a non-dividend paying stock is 40 and the continuously compounded risk-free rate of return is 8%. The following table shows call and put option premiums for three-month European options of various exercise prices. A trader is considering two investment strategies. The first is a long 40-strike call and long a 40-strike put. The second is long a 35-strike put and long a 45-strike call. Assume one option is on one share.

	Call K=35	Call K=40	Call K=45	Put K=35	Put K=40	Put K=45
Premium	6.13	2.78	0.97	0.44	1.99	5.08

(a) Please show the payoff and profit table and draw the diagram (payoff and profit) for both strategies. Assume S_T is the stock price in 3-month.

(b) Determine the range of stock prices in 3 months for which the second strategy outperforms the first strategy.