this is the case study .I need complete answer about 800 words for part 1 and part 2 both . you have to use financial options and Advanced strategies to support your answer. don't use basic strategies. thanks

requirements:

At work you will request 1) Explain the market expectation 2) Explain the option strategy adopted, pointing out the expected profit and loss points, and the break levels for the underlying that make it go from profit to loss

Derivative Strategies We have a Private Banking client, who is a director of a leading financial institution. Within its assets, which we are actively managing, there are two clearly differentiated portfolios: a first portfolio is especially diversified in European equities, with an overweight in cyclical stocks. The second part of the portfolio is an important position in shares of the bank for which he works, which come from an executive bonus plan, and therefore cannot be sold on the market without a communication to the entity and the regulator that you want to avoid. To date, the valuation of the portfolio corresponds to the following table: customer bank European Portfolio Total Actions Quotation Assessment 340,000 4,554 1,548,360 2,345,000 3,521,000 During a meeting with us, the client expressed his concern about possible significant declines in the bank's share price, since the stock is experiencing strong volatility. At that time, the implied volatility under which the financial institution's options are listed is high, compared to its history. Even so, the situation is justified given the existing uncertainty due to regulatory issues and the possible slowdown in the economy caused by the increase in interest rates to curb inflation. Similarly, certain political decisions in the near future could opt for an option that attempts to increase control of entities, a reason that could even increase volatility. The client asks us about a possible coverage for a term until the expiration of the month of August, which corresponds to the 19th of that month. By that date, much of the uncertainty may have been resolved, in your opinion. In order to hedge the downside risk of stock positions, the client asks us about the possibility of using derivatives, and more especially options. He knows that working with options can entail an additional cost, and he does not want to lose more than 5% of the value of the shares (of the financial institution) today. We have the following strikes available, due August 19: Strike 3.5 3.8 3.9 4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 5 5.1 5.2 5.5 call 1,058 0.766 0.673 0.584 0.499 0.421 0.349 0.284 0.228 0.180 0.139 0.106 0.079 0.058 0.042 0.030 0.010 Put 0.001 0.009 0.016 0.027 0.042 0.063 0.091 0.127 0.170 0.222 0.281 0.348 0.421 0.500 0.584 0.672 0.951 *Note: Each option has an underlying of 100 shares, with an additional multiplier of 1. The bank's shares were trading at 4,554 euros when these prices were taken, and it did not expect any dividend payment between now and the expiration of the options (August 19). Consider, for the selected period, a rate free of 0.5% fixed compound risk, payable daily under the ACT/365 basis. [This type of interest is applied, both to the valuation of the options, and to the remuneration of the current account, for cash] Dated June 24, and for a duration until the expiration of August 19, we have to propose a strategyfor value coverage, through a combination of options, with the limitations set forth for our client. Once the portfolio proposal is delivered, it will be implemented and the prices of various scenarios (created under a simulation) will be sent until August 21 for both the stock and the different options. Subsequently, the work must be completed with the study of the strategy, considering the possible benefits or losses generated and explaining their origin, in each scenario. At work you will request 1) Explain the market expectation 2) Explain the option strategy adopted, pointing out the expected profit and loss points, and the break levels for the underlying that make it go from profit to loss Derivative Strategies We have a Private Banking client, who is a director of a leading financial institution. Within its assets, which we are actively managing, there are two clearly differentiated portfolios: a first portfolio is especially diversified in European equities, with an overweight in cyclical stocks. The second part of the portfolio is an important position in shares of the bank for which he works, which come from an executive bonus plan, and therefore cannot be sold on the market without a communication to the entity and the regulator that you want to avoid. To date, the valuation of the portfolio corresponds to the following table: customer bank European Portfolio Total Actions Quotation Assessment 340,000 4,554 1,548,360 2,345,000 3,521,000 During a meeting with us, the client expressed his concern about possible significant declines in the bank's share price, since the stock is experiencing strong volatility. At that time, the implied volatility under which the financial institution's options are listed is high, compared to its history. Even so, the situation is justified given the existing uncertainty due to regulatory issues and the possible slowdown in the economy caused by the increase in interest rates to curb inflation. Similarly, certain political decisions in the near future could opt for an option that attempts to increase control of entities, a reason that could even increase volatility. The client asks us about a possible coverage for a term until the expiration of the month of August, which corresponds to the 19th of that month. By that date, much of the uncertainty may have been resolved, in your opinion. In order to hedge the downside risk of stock positions, the client asks us about the possibility of using derivatives, and more especially options. He knows that working with options can entail an additional cost, and he does not want to lose more than 5% of the value of the shares (of the financial institution) today. We have the following strikes available, due August 19: Strike 3.5 3.8 3.9 4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 5 5.1 5.2 5.5 call 1,058 0.766 0.673 0.584 0.499 0.421 0.349 0.284 0.228 0.180 0.139 0.106 0.079 0.058 0.042 0.030 0.010 Put 0.001 0.009 0.016 0.027 0.042 0.063 0.091 0.127 0.170 0.222 0.281 0.348 0.421 0.500 0.584 0.672 0.951 *Note: Each option has an underlying of 100 shares, with an additional multiplier of 1. The bank's shares were trading at 4,554 euros when these prices were taken, and it did not expect any dividend payment between now and the expiration of the options (August 19). Consider, for the selected period, a rate free of 0.5% fixed compound risk, payable daily under the ACT/365 basis. [This type of interest is applied, both to the valuation of the options, and to the remuneration of the current account, for cash] Dated June 24, and for a duration until the expiration of August 19, we have to propose a strategyfor value coverage, through a combination of options, with the limitations set forth for our client. Once the portfolio proposal is delivered, it will be implemented and the prices of various scenarios (created under a simulation) will be sent until August 21 for both the stock and the different options. Subsequently, the work must be completed with the study of the strategy, considering the possible benefits or losses generated and explaining their origin, in each scenario. At work you will request 1) Explain the market expectation 2) Explain the option strategy adopted, pointing out the expected profit and loss points, and the break levels for the underlying that make it go from profit to loss