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You buy a put option withstrikeprice of $40 and simultaneously buy two call options with the same strike price, $40. Currently, the market value of
You buy a put option withstrikeprice of $40 and simultaneously buy two call options with the same strike price, $40. Currently, the market value of the underlying asset is $39. The put option premium is $2.50 and a call option sells for $3.25. Assume that the contract is for 1 unitof the underlying asset. Assume the interest rate is 0%.Draw a diagram depicting the net payoff (profit diagram) of your position at expiration as a function of the market value of the underlying asset.
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