Question 3 You would like to create a bear call spread using the following quotes: 3 Calls on Stock ABC Option type Exercise price Option premium $20 $6.50 $25 $3.50 Required: (a) Explain how to create the bear spread by using the above options. Draw the profit and loss diagram of this strategy on the expiration date and complete the following table. Profit/Loss and break-even points P/L & BE points Strategy When ST $25 Break-even point P/L= P/L= ST= (8 marks) (b) Now sell another call on ABC with strike price of $25 in addition to the bear call spread in part (a). (Now you have a "call ratio spread.) Draw the profit and loss diagram of the updated strategy on the expiration date and complete the following table. Profit/Loss and break-even points P/L & BE points Strategy P/L= When ST