Suppose that the price of a non-dividend-paying stock is $32, its volatility is 30%, and the risk-free

Question:

Suppose that the price of a non-dividend-paying stock is $32, its volatility is 30%, and the risk-free rate for all maturities is 5% per annum. Use DerivaGem to calculate the cost of setting up the following positions. In each case provide a table showing the relationship between profit and final stock price. Ignore the impact of discounting.
a. A bull spread using European call options with strike prices of $25 and $30 and a of six months.
b. A bear spread using European put options with strike prices of $25 and $30 and a of six months
c. A butterfly spread using European call options with strike prices of $25, $30, and $35 and a of one year.
d. A butterfly spread using European put options with strike prices of $25, $30, and $35 and a of one year.
e. A straddle using options with a of $30 and a six-month
f. A strangle using options with strike prices of $25 and $35 and a six-month Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity. Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...