Tommy is an analyst focusing on farm industries. Recently, he believes that the share price of PPO, a biotech firm, will be significantly influences by the outcome of US food and drug administration approval on its new drugs. If the application is successful, Tommy believes that PPOs share price will would increase sharply. If the application is unsuccessful, he believes that PPOs share price would fall significantly. Tommy wants to profit from his beliefs by implementing a straddle. He collects the following information

Current share price of PPO $11.60

Risk free rate 1.6%

Price of 30-day call option with strike price 11.30 is $1.3

Price of 30-day put option with strike price 11.30 is $1.7

1. Calculate the profit per share on the straddle if PPOs application is successful and TTHs share price doubles?

2. Calculate two share prices of PPO at which breakeven for straddle occurs?