Show graphically and in a table the profit and T-bond price relationships at expiration for the following
Question:
Show graphically and in a table the profit and T-bond price relationships at expiration for the following positions on OTC T-bond options. In each case, assume that the T-bond spot call and put options each have exercise prices of $100,000 and premiums of $1,000, and that there is no accrued interest at expiration. Evaluate at spot T-bond prices of $90,000, $95,000, $100,000,
$105,000, and $110,000.
a. A straddle purchase formed with long positions in the T-bond call and put options.
b. A straddle write formed with short positions in T-bond call and put options.
c. A simulated long T-bond position formed by buying the T-bond call and selling the T-bond put.
d. A simulated short stock position formed by selling the T-bond call and buying the T-bond put.
e. A strip purchase formed with long positions in one T-bond call and two puts.
f. A strap write formed with short positions in two T-bond calls and one put.
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