You are the VP of Finance for the wine manufacturer SIPP. Your company wants to reduce the volatility of its cash flows by making its cash flows less sensitive to changes in grape prices. It will do so by buying a call option on a grape ETF with a strike price $50 and buying a put option on a grapes ETF with a strike price of $50. Both options are American and expire in one year. Suppose that you sell both options and decide to purchase a put with a strike price of $40 and a call with a strike price of $60. All the options are American with the same maturity date as the original portfolio. What is the expected cost of this option strategy? Higher Equal Lower QUESTION 24 You are the VP of Finance for the wine manufacturer SIPP. Your company wants to reduce the volatility of its cash flows by making its cash flows less sensitive to changes in grape prices. It will do so by buying a call option on a grape ETF with a strike price $50 and buying a put option on a grapes ETF with a strike price of $50. Both options are American and expire in one year. Suppose that you sell the put, use the premium to pay for the call, and then decide to sell a call with a strike price of $70. All the options are American with the same maturity date as the original portfolio. If grape prices hit $90 next month, what is the payoff of your option strategy? 0 60 20