Question 2 [25 marks] When answering each question, state any additional assumptions you may need to make. Show all working/calculations. (a) Consider the following two strategies: Strategy 1: Go long one call option with strike price K + 2C, go long one call option with strike price K 2C, and go short 2 call options with strike price K. Strategy 2: Go short two put options with strike price K, go long one put option with strike price K 2C, and go long one put option with strike price K + 2C. Both strategies are based on the same underlying non-dividend paying stock and all op- tions are European and have the same maturity date, T. Both K and C are positive con- stants, K 2C > 0 and the stock price today is equal to K. Which strategy has the higher cost to implement today? You must use a payoff table at maturity to comprehensively justify your answer, stating any assumptions. Why would a trader use these strategies? [10 marks]