You own a stock currently at $50.

You buy a 6-month put option with a 45 strike for a price of 4.

You sell a 6-month call option with a 60 strike for a price of 3.

Fill in the net profit table for the following stock prices at the end of 6 months.

Stock price in 6 months Net value

65

60

55

50

45

40

4.You can buy or sell calls and puts. Which option has unlimited upside? Which option has unlimited downside? Which option has a limited upside? Which option has a limited downside?

5.You need to buy oil in 3 months. How can you create an option position using puts and calls to limit your exposure to a change in oil prices?

6.You need to sell your Google stock in 6 months. How can you create an option position using puts and calls to limit your exposure to a change in stock price?