Question: Part II: Problems (25 Points Total) Answer on this document, in the space provided. Use the back of the sheet if you need additional

Part II: Problems (25 Points Total) Answer on this document, in the space provided. Use the back of the sheet if you need additional space. Any work not labeled clearly will not be graded. Show all your work. Unsupported statements or numbers will not receive any grade. Q1: Option portfolio payoff: Suppose that the price of a share of stock in ABC Corporation is currently trading at $30/share. Consider selling the following two options on one share of ABC: a. A Call option with a strike price of $35 b. A Put option with a strike price of $25 (i): (4 points) Draw a payoff diagram of this portfolio. Note: Clearly label both axes as well as the location of each important point on the diagram. Show which portion of the payoff is a result of which corresponding option.

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