Consider the following portfolio:

Write a call option contract on $100$ shares of Intel stock with an exercise price of $$65,$ and hold a put

option contract on $100$ shares of the same stock with the same time to expiration and the same

exercise price. Both options are European options. Assume you do NOT own the stock and that you

are an institution exempt from having to write only covered calls.

Draw the payoff diagram for this portfolio on the expiration date. You can draw the diagram either

on a per contract $(100$ shares$)$ or a per share basis. $\{$Hint: Compute the total payoff from the

portfolio on the expiration date assuming different stock prices. You may want to consider the

following stock price ranges: $($i$)$ stock price greater than $$65,($ii$)$ stock price at $$65,$ and $($iii$)$ stock

price lower than $$65.$ This will help you draw the payoff diagram.$\}$