You are shorting 5 lots of XYZ Bhd. Stock price currently at RM 8.00. You think XYZstock is likely to drop over the next few weeks. You want to participate in a potential drop without exposing yourself to too much risk. 1 lot =100 share.

The following quotes are available.

30-day ABB 8.00 call @ 0.35

30-day ABB 8.00 put @ 0.25

(i) State the name of your strategy. (3 marks)

(ii) Outline the above strategy. (4 marks)

(iii) Graph the strategy (plot the position, label all axes, max, min points specify the option and state long or short position). (10 marks)

(iv) Outline the risk profile. (2 marks)

(v) State the maximum profit, maximum loss and breakeven point(s) in RM value. (6 marks)