1.Construct a bear money spread using the October

165 and 170 calls. Hold the position until the

options expire. Determine the profits and graph

the results. Identify the breakeven stock price at

expiration and the maximum and minimum

profits. Discuss any special considerations associated

with this strategy.

2. Repeat question 1, but close the position on

September 20. Use the spreadsheet to find the

profits for the possible stock prices on September

20. Generate a graph and use it to identify the

approximate breakeven stock price

3. Construct a collar using the October 160 put.

First, use the Black-Scholes-Merton model to

identify a call that will make the collar have zero

up-front cost. Then close the position on September

20. Use the spreadsheet to find the profits

for the possible stock prices on September 20.

Generate a graph and use it to identify the

approximate breakeven stock price. Determine

the maximum and minimum profits.

4. Construct a calendar spread using the August

and October 170 calls that will profit from high

volatility. Close the position on August 1. Use the

spreadsheet to find the profits for the possible

stock prices on August 1. Generate a graph and

use it to estimate the maximum and minimum

profits and the breakeven stock prices.

5. Construct a long straddle using the October 165

options. Hold until the options expire. Determine

the profits and graph the results. Identify the

breakeven stock prices at expiration and the

minimum profit.

6. A strip is a variation of a straddle involving two

puts and one call. Construct a short strip using

the August 170 options. Hold the position until

the options expire. Determine the profits and

graph the results. Identify the breakeven stock

prices at expiration and the minimum profit.