Question: 1 . Consider the following options portfolio: You write a January 2 0 1 2 expiration call option on IBM with exercise price $ 1

1. Consider the following options portfolio: You write a January 2012 expiration call option on IBM with exercise price $170. You also write a January expiration IBM put option with exercise price $165.
a. Graph the payoff of this portfolio at option expiration as a function of IBMs stock price at that time.
b. What will be the profit/loss on this position if IBM is selling at $167 on the option expiration date? What if IBM is selling at $175? Refer to Figure 15.1.
c. At what two stock prices will you just break even on your investment?
d. What kind of bet is this investor making; that is, what must this investor believe about IBMs stock price in order to justify this position?
1. Consider the following options portfolio: You write a January 2012

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