1.Consider a call and a put on the same underlying stock and the same maturity date. The call has an exercise price of $80 and costs $12. The put has an exercise price of $70 and costs $8. To create a short strangle from these options:

a. Long the $80 call and long the $70 put

b. Short the $80 call and long the $70 put

c. Long the $80 call and short the $70 put

d. Short the $80 call and short the $70 put

2.For the short strangle that you create in the above question, what is the best outcome from selling the strangle?

a. Unlimited profit

b. A profit of $30 when the stock price is between $70 and $80

c. Unlimited loss

d. A profit of $20 when the stock price is between $70 and $80

3.For the short strangle that you create in the above questions, what is the worst outcome from selling the strangle?

a. Unlimited profit

b. A loss of $30 when the stock price is between $70 and $80

c. Unlimited loss

d. A loss of $20 when the stock price is between $70 and $80

4.For the short strangle that you create in the above question, at what stock prices does it have a zero profit?

a. $50, $100

b. $70, $100

c. $70, $80

d. $50, $80