Buy the stock, buy the MAR K =25 put and sell all the MAR K =40 calls that are necessary to finance the put purchase. Graph the P/L at expiration of the strategy in the first part.

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t = FEB 26 St 29.50 29.50 27.50 K 25.00 29.50 30 29.50 32.50 29.50 35 29.50 37.50 29.50 40 MAR 4.88 2.63 1.56 .53 .31 .08 Call APR 5.30 3.63 2.44 1.83 .81 .50 .31 JUL 7.00 2.19 1.25 MAR .44 1.00 2.00 3.50 5.75 11.13 Put APR 1.00 1.94 3.00 4.50 6.25 9.00 11.25 JUL 2.08 7.38 11.50 t = FEB 26 St 29.50 29.50 27.50 K 25.00 29.50 30 29.50 32.50 29.50 35 29.50 37.50 29.50 40 MAR 4.88 2.63 1.56 .53 .31 .08 Call APR 5.30 3.63 2.44 1.83 .81 .50 .31 JUL 7.00 2.19 1.25 MAR .44 1.00 2.00 3.50 5.75 11.13 Put APR 1.00 1.94 3.00 4.50 6.25 9.00 11.25 JUL 2.08 7.38 11.50

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To graph the profitloss PL at expiration of the strategy we need to calculate the PL for different s... View the full answer