You buy shares of Simon Property Group (SPG) for $38. Simultaneously with the stock purchase, you buy 3-month puts in SPG equal to the total value of your stock purchases. Each put costs $0.50 with a strike price of $35. You also simultaneously sell 3-month calls in SPG for $0.50 with a strike price of $40.

a) What is the maximum profit and what is the maximum loss for your strategy?

b) Show your position strategies in a typical option profit and loss diagram, considering the possible stock prices which would affect your strategy at expiration of the options in 3 months.