Question: a,b,c Roy constructs an options portfolio based on the MXC stock. He writes a call option with exercise price $74 and writes a put option

a,b,c a,b,c Roy constructs an options portfolio based on the MXC stock. He

Roy constructs an options portfolio based on the MXC stock. He writes a call option with exercise price $74 and writes a put option with exercise price $70. Both options have the same expiration date. Option price Exercise price MXC Call $0.42 $74 MXC Put $0.58 $70 a. Draw the payoff diagram of this portfolio at option expiration as a function of MXC stock price at that time. (4 marks) What will be the profit/loss on this position if MXC is selling at $72 on the option expiration date? What if MXC is selling at $77? (6 marks) b. c. At what two stock prices will Roy break even on his position? (4 marks)

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