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= What follows are several portfolios; each is denoted by the term Port. Graph the profit curve at t T for each of them. Determine
= What follows are several portfolios; each is denoted by the term Port. Graph the profit curve at t T for each of them. Determine the strengths and weaknesses of each portfolio. Namely, explain what a reasonable investor must be expecting to adopt each portfolio. In this listing, CE denotes a Call with strike price E, -Ce represents going short on a Callthe Call was sold, Pe is a put, Pe is going short on a put, and the numbers E indicate the strike price. (e) A Long Straddle is Port = PE + CE; namely, buy both a Put and Call a with the same strike price. (f) A "Short Straddle" is Port = -P-C. (g) A Long Strangle is Port = PE + CE2; namely, it is a purchase of a put at strike price E1, which is less than the strike price of a Call at E2
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