Question: ): For the following strategy, construct a profit table and then graph the profit. Buy 1 put option (Put 1 ) with an exercise price

): For the following strategy, construct a profit table and then graph the profit.

Buy 1 put option (Put1) with an exercise price of X1

Write 1 put option (Put2) with an exercise price of X2

Write 1 call option (Call1) with an exercise price of X3

Buy 1 call option (Call2) with an exercise price of X4

Where X1 < X2 < S < X3 < X4

And S is the current stock price

The two purchased options will have lower premiums than the two written options since they are less valuable at the time the strategy is created.

Put1 < Call2 < Put2 < Call1

You may assume $ values for all PUT/CALLS

Stock Price at Expiry

Put1 Profit

Put2 Profit

Call1 Profit

Call2 Profit

Total Profit

S < X1

X1-S-PUT1

X1 < S < X2

X2 < S < X3

X3 < S < X4

S > X4

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