You just heard on CNN that war in the Gulf could break out any moment. The thinking on Wall Street appears to be that while a short and quick war that ends within a month would be bullish for US stocks, while a long dragged out one could be hugely detrimental. As a savvy investor of options, you are thinking of an appropriate strategy. The website of your US broker contains the following quotes: Dow Jones Index Average = 7960 points

90-day S&P 500, 950 call @ 14 points S&P 500 = 950 points 90-day S&P 500, 950 put @ 10 points 90-day US T-Bill rate = 5.6% Spot month S&P 500 @ 3 points (expiring next

week)

Outline and graph the best strategy, carefully label the graph and show the payoff. Explain why your strategy is the best.