QUESTION 4: (10 Marks)

Graph the profit at maturity diagram for the following options which have the same maturity on the same stock). Label and calculate intercepts and key points. Detail cashflows today and at maturity.

1. (4 marks) Buy a call (X= 100) for 3$ and buy a put (X=95) for 2.50$.
2. (4 marks) Sell a put (X=100) for 4.20$ and sell a call (X=95) for 6$.
3. (2 marks) Combine (a) and (b) and explain your results.