Question: Question 1 [ 2 0 Marks ] You create an options portfolio by selling a put option with an exercise price of 9 0 while

Question 1
[20 Marks]
You create an options portfolio by selling a put option with an exercise price of 90 while simultaneously
purchasing a put option on the same stock with an exercise price of 95. Both options expire on the same
date.
a. Illustrate the payoff structure of this portfolio at the options' expiration date.
b. On the same chart, display the portfolio's profit at expiration. Which of the two options should have
a higher premium? Briefly explain why.
Question 1 [20 Marks] You create an options portfolio by selling

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