1)Dumo is a trader at ZNF Equity traders and has just identified a stock, UFSI Limited, which is currently trading at R25 per share. Dumo decides to take a long position in at-the money put option and simultaneously buys one share of UFSI stock. The put option expires in 3 months' time and costs R2.5 per share. Assume a contract consists of one put option.

Required:

a)Identify the strategy employed by Dumo above.(2)

b)Tabulate the Profit to the strategy at expiration for the following(8)

i.Exercise price R30; Stock price 20.

ii.Exercise price R30; Stock price 35.