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You buy a put option with a strike price of $35 for $3 and simultaneously and sell a put option with a strike price of
You buy a put option with a strike price of $35 for $3 and simultaneously and sell a put option with a strike price of $30 for $1. Both options are of the European type on the same underlying stock and have the same time to expiration. This strategy is called a bear spread. (Enter a positive number for a profit or a negative number for a loss.) a) What is the payoff to this strategy if the stock price ends up below $30 at expiration? $ b) What is the payoff to this strategy if the stock price ends up above $35 at expiration? $ c) What is the maximum possible profit with this strategy? $ d) What is the maximum possible loss with this strategy? $
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