Question: Hey, can someone solve this problem? It is about options strategy and the payoff diagram. Problem 4. (20 points) You have a portfolio that consists

 Hey, can someone solve this problem? It is about options strategy Hey, can someone solve this problem?
It is about options strategy and the payoff diagram.

Problem 4. (20 points) You have a portfolio that consists of the following: 1) One share of ABC stock 2) Long position in a European put option on shares of ABC with strike price of $40 and one year to maturity 3) Short position in two European call options on shares of ABC with Strike price of $30 and one year to modernity 4) Long position in a European call option on shares of ABC with strike price of $50 and one year wo maturity (a) Draw a diagram of the payoff to this portfolio at the end of the year. Mark carefully the axes and important numbers (b) Looking at your picture, please provide a short (maximum 3 lines) characteristic of an investor who would like such a strategy. Can you name any other strategy with similar characteristics? (c) Using the payoffline from point a) please sketch a profit line of this strategy. What argument do you base your picture on

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