Question: Problem 1: (10 marks) a) Plot the payoff and profit of the following options based strategy: Buy 3 puts with strike 100 , sell 4

Problem 1: (10 marks) a) Plot the payoff and profit of

Problem 1: (10 marks) a) Plot the payoff and profit of the following options based strategy: Buy 3 puts with strike 100 , sell 4 puts with strike 110 and buy 1 put with strike 140. Explain all your calculations. (6 marks) b) If the price of the put with strike 100 is $8 and the price of the put with strike 140 is $16, what can you say about the price of the put with strike 110? Explain (4 marks)

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