Question 1:

1A.) A long strap is an option strategy that involves buying one put option and two call options, all with the same strike price (say X) and expiration date. a). Construct the payoff table at expiration for the long strap strategy. b). Draw the payoff diagram at expiration for the long strap strategy and label all the critical points and lines drawn (i.e., label the slopes and intercepts).

1B.) A short strip is an option strategy that involves writing two put options and writing one call option, all with the same strike price (say X) and expiration date. a). Construct the payoff table at expiration for the short strip strategy. b). Draw the payoff diagram at expiration for the short strip strategy and label all the critical points and lines drawn (i.e., label the slopes and intercepts).