The following strategies were discussed in the video lecture on options strategies. Given the following scenarios, indicate which strategy you would use and why. Strategies Protective Put Covered Call Spread Straddle Collar 1. As part of your inheritance, you received shares of stock in a company as part of a trust fund. You are restricted from selling the shares of stock for five years. You don't think that the firm is being managed well and that the price will fall prior to the end of the five year period. What option strategy could you use to protect yourself from the loss in value? (3 points) 2. You run a mutual fund and you have decided that the most that Apple Inc. stock is worth is $270 and you plan to sell the stock when it reaches that point. What option strategy could you take to make additional income if your belief is correct? (3 points) 3. You believe that Microsoft stock is going to increase in price from $147 to $160 in the next six months. You want to purchase call options to take advantage of the increase in price, but can't afford the full price of the options. What strategy would be best for this situation? 4. The Walt Disney Company's foray into streaming services presents a situation that will result in a large stock price increase could occur if the venture is successful, or a large loss if it is not. If the streaming service, Disney+, does well, the stock price is expected to increase by 30%. If the service is not well received, Disney's stock price is expected to fall by 30%. Which option strategy would be the best strategy to make a profit from this situation? (3 points) Given the following scenarios, determine the portfolio value and profit of the strategy. Please show your (typed) work to receive credit. 5. Create a Straddle Stock price today = 5 =$150 Strike Price= X = $150 Call Price =$15.79 Put Price = $15.60 a. (3 points) The stock price increases to $175. Portfolio Value: Cost of Portfolio: Profit: b. (3 points) The stock price decreases to $125 Portfolio Value: Cost of Portfolio: Profit: 6. Create a Covered Call Stock Price today: $346 Strike Price: $400 Call Price: $47.80 a. (3 points) Stock price decreases to $300 Portfolio Value: Cost of Portfolio: Profit: b. (3 points) Stock price increases to $470 Portfolio Value: Cost of Portfolio: Profit: 7. Create a Protective Put Stock Price today: $16 Strike Price: $18 Put Price: $5.13 a. (3 points) Stock price decreases to $12 Portfolio Value: Cost of Portfolio: Profit: b. (3 points) Stock price increases to $22 Portfolio Value: Cost of Portfolio: Profit