You are an option trader with modestly bearish outlook. You decide to construct a bear spread but unsure whether to construct a put or call bear spread. Recall that both put and call bear spread strategies involves selling an option with a strike price of K1 and buying an identical option with the same expiration date with a strike price of K2, where K2>K1. (a) If you are trying to limit your initial cash outflow, would you construct a put or a call bear spread and why? (b) Draw out the profit-loss table for both a put and call bear spread. What is the maximum gain or loss for both a put and a call bear spread? Given your response in part (a), discuss whether your maximum gain or loss is realized today. (c) Explain how changes in implied volatility affects option premiums. Hence, given your response in part (b), explain how low implied volatility today may affect your preference towards either call or put bear spreads