Use the AAPL option chain for questions 5-8. Remember that if it is stated that 20 contracts are to be used, this means 20 contracts of each option that may be part of a strategy. 6. In April 2020, your neighbor believes that AAPL stock will break out dramatically over the next couple of months, but given all the uncertainty, he is not sure in which direction. He is going to construct a strangle on AAPL stock using 25 contracts with the October 265 and October 285 options. a. Will the investor set up a long or a short strangle? b. What is the total value of the premiums to your neighbor? c. Solve for the profit for the following AAPL prices at expiration: $210, $240, $265, $290, $320. d. What are the two breakeven points? e. Suppose instead that she chooses to construct her strangle on the October 270 and October 280 options. What is the profit if the AAPL price at expiration is $275, and what are the two breakeven points? Listed Options Quotes AAPL (4/22/20) Calls 853 Puts Volume Open Int 285 902 12,764 182 3,668 41 2,004 250 9,817 93 SO3 409 3,031 60 1,869 16 653 1 2,249 320 525 1,180 8,412 187 1.545 4 811 80 5,651 137 521 6,3GB 3,640 10 208 31 3,550 922 866 600 10,364 72 1,842 40 526 5 7.910 727 292 112 872 323 AAPL close $276.10 Expiry Strike May 250.00 June 250.00 July 250.00 October 250.00 January 250.00 May 255.00 June 255.00 July 255.00 October 255.00 January 255.00 May 260.00 June 260.00 July 260.00 October 260.00 January 260.00 May 265.00 June 265.00 July 265.00 October 265.00 January 265.00 May 270.00 June 270.00 July 270.00 October 270.00 January 270.00 May 275.00 June 275.00 July 275.00 October 275.00 January 275.00 May 280.00 June 280.00 July 280.00 October 280.00 January 280.00 May 285.00 June 285.00 July 285.00 October 285.00 January 285.00 May 290.00 June 290.00 July 290.00 October 290.00 January 290.00 May 295.00 June 295.00 July 295.00 October 295.00 January 295.00 May 300.00 June 300.00 July 300.00 October 300.00 January 300.00 214 489 Last $ 30.36 $ 35.82 5 37.90 $ 43.85 5 47.85 $ 20.76 $ 32.70 5 3520 $39.00 $ 45.90 5 22.34 $28.87 $ 3101 $ 38.10 $43.20 $18.95 $ 25.35 $ 29,00 $ 33.25 $40.20 $ 15.20 $ 21.70 $ 25.55 $ 32.10 $ 37.40 5 11.68 $18.76 $ 22.00 $ 30.00 $ 35.25 $ 9.25 $ 16.19 $ 19.26 5 27.27 5 32.00 $ 6,90 $ 13.45 $ 16.55 $ 25.00 $ 29.55 $ 5.00 $11.13 $ 14.44 $ 22.40 $ 27.60 $ 3.40 $9.20 $ 12.25 $ 20.32 $24.85 $ 2.43 $ 7.30 $ 10.70 $18.20 $ 23.15 Volume Open Int 17 851 48 6,948 10 1,293 3 346 88 8.861 123 212 9 1,910 2 582 1 202 9 4,658 57 182 99 7,436 30 1,379 4 10 7,082 62 545 240 5,410 26 2 199 13 2.367 129 500 281 8,286 114 2,429 13 754 94 4,916 911 844 379 5,045 212 1.249 40 641 57 1,807 444 616 934 10,008 266 2729 27 1,084 123 13,222 740 973 743 2,612 29 1335 50 573 48 1,120 472 1825 708 11,674 76 2.255 43 710 95 8,053 759 987 694 1.952 86 1,228 30 343 13 526 790 1,704 1,936 13,797 359 8,177 75 3,473 146 17,385 $ 3.60 $ 9.62 $ 12,00 $ 18.20 $ 23.50 $ 4.63 $ 11.00 5 13.75 $ 20.65 $26.20 $5.95 $ 12.67 $ 15.30 $ 23.60 $ 27.15 $ 7.50 $ 14.06 $ 17.12 $24.54 $ 30.47 5 8.75 $15.90 $ 19.40 $26.45 $31.50 $ 11.23 $18.45 $ 21.10 $28.85 $ 34.45 $ 13.45 $ 20.13 $ 23.73 $31.00 $ 37.00 $16.75 $ 22.60 $ 25.80 $ 35.34 $ 40.00 $ 18.80 $ 25.15 $ 28.20 $ 41.20 S 41.27 $ 30.79 $ 28.50 $ 38.39 $43.90 $ 46,10 $ 27.13 $ 31.30 $ 37.23 $ 45.97 5 47.54 198 31 64 78 227 111 35 29 92 126 47 1 27 25 13 90 2 122 5 20 91 28 28 21 22 5 8 20 2,770 2,562 1,354 3,188 569 9,999 2,877 475 9,358 182 543 1,373 466 1,308 91 8,199 8,986 250 8.793 30 210 4,636 223 299 107 8,334 3,942 489 8,070