Question: A 3:1 reverse hedge (buy three May 30 calls and short the stock). Corporations (fictitious name), where the options expire on the same date in

A 3:1 reverse hedge (buy three May 30 calls and short the stock).

Corporations (fictitious name), where the options expire on the same date in May. Draw profit diagrams in each case, clearly showing the stock price corresponding to zero profit, the maximum profit and loss, and so on.

Stock Strike (K) Call Price Put Price $29 $25 $5 $1 30 35 1

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