2. An investor purchases a stock for $38 and a put for $0.6 with a strike...
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2. An investor purchases a stock for $38 and a put for $0.6 with a strike price of $40. The investor sells a call for $0.8 with a strike price of $42. a. Find out the payoffs and profits of the investor's position in the stock, put and call option at expiration if the following prices: i. $30, ii. $35, iii. $40 and iv. $50 b. Draw the profit and loss diagram for this strategy as a function of the stock price at expiration. 2. An investor purchases a stock for $38 and a put for $0.6 with a strike price of $40. The investor sells a call for $0.8 with a strike price of $42. a. Find out the payoffs and profits of the investor's position in the stock, put and call option at expiration if the following prices: i. $30, ii. $35, iii. $40 and iv. $50 b. Draw the profit and loss diagram for this strategy as a function of the stock price at expiration.
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