The table on the left shows the prices of call and puts at different strike prices of options on Alphabet Inc. (GOOG) on 12th February, 2021. The expiration of all options are same - June 18, 2021. The market price of the GOOG stock on 12th February, 2021 is $2,092.91. Remember to make buy /sell decisions of options based on bid/ask prices (not last prices).

1. If you expect stock price is more likely to go up to $3,000, what strategy would better serve you? Explain. Calculate payoff and profit of the strategy.

2. Calculate the range of stock prices beyond which your profit would be positive if you follow the strategy in (1)?

All problems require detailed calculations.

% Open Bid Ask Change Change Volume Interest 339.5 348.4 -4.28 -1.25% 3 618 324 323.5 332.1 0 2 100 309.6 316 101.61 49.53% 3 53 294.3 300 -26.1 -8.31% 1 231 279.6 286.8 28.6 11.12% 2 120 266.1 273.2 24.02 8.96% 1 307 251.8 258.4 0 2 442 237 245.2 0 2 41 224 234 0 2 133 211.5 219.5 27.83 14.39% 1 87 200 209 0 5 520 145.5 154.2 -4.1 -2.73% 764 102.5 108.7 -3.4 -3.09% 766 73.1 79.2 -4.74 -6.34% 257 12.5 13.9 0 55 48 49.8 -4.2 -7.75% 338 51.6 57.3 -2.2 -4.01% 75 56.1 61.2 -7.6 -11.69% 19 60.5 63.6 0.1 0.16% 28 66.7 69 -14.4 -17.43% 22 71.6 75 1.4 1.90% 319 77.5 80.9 3.2 4.00% 17 84 87.4 -73.3 -45.11% 6 90.4 94.7 0.7 0.75% 49 96.1 102.5 1 0.98% 28 110 105.8 110.1 1.1 1.01% 45 151.9 156.4 -2.55 -1.64% 23 208.1 213.9 -26.25 -11.60% 4 274.8 281.8 0 9 712.2 722 0 1 Strike Last Price 1800 337.72 1820 1840 306.77 1860 287.8 1880 285.7 1900 292.12 1920 261.16 1940 218 1960 231 1980 221.18 2000 202.25 2100 146 2200 106.6 2300 70 2800 12.25 50 1800 52.7 1820 57.4 1840 62.8 1860 68.2 1880 75.2 1900 83.2 1920 89.2 1940 93.9 1960 102.8 1980 2000 2100 2200 2300 2800 153.25 200 280.8 935 8192 11 7 1 3 1 4 1 1 3 1 2 51 7 1 st 4