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The current share price of STW Corp is $53. Given his forecasts of the future share value, Jim wrote two call options on STW

The current share price of STW Corp is $53. Given his forecasts of the future share value, Jim wrote two call options on STW at a strike price of $50 and bought two call options - one with a strike price of $45, the other $55. Information on the options can be found in the table below: Option Type Exercise Price Call Call Call 45 payoff profit 50 55 Premium 50 < ST < 55 $7.29 $4.46 All options are European options and have STW Corp as underlying; all options have identical maturities. In the table below, tabulate the profits of Jim's investment strategy (ST stands for the share price of STW at option maturity; the payoff and profit can be a function of ST). a) What is the maximum profit? What about maximum loss? ST < 45 45 ST < 50 $2.50 ST > 55

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