Calculation of an American put using the numerical method of CRR (1979). (S=102; X=104; rf = 0.045; T=0.5; sigma=0.45;  n = 450). Redo your calculations with the  Jarrow -Rudd (1982) coefficients 

  

a) Make the diagram of the Straddle. Explain your diagram.

b) What type of strategy can be used if the expected volatility of the underlying is low? Draw the diagram and explain your answer.

c) What is meant by covered call? Make the profile (chart) of cash flows a covered call on a share (or bond)