Identify six different strategies the investor can follow

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1. A call with a strike price of $60 costs $6. A put with the same strike price and expiration date costs $4. Construct a table that shows the profit from a straddle. For what range of stock prices would the straddle lead to a loss?

2. Construct a table showing the payoff from a bull spread when puts with strike prices K1 and K2, with K2 > K1, are used.

3. An investor believes that there will be a big jump in a stock price, but is uncertain as to the direction. Identify six different strategies the investor can follow and explain the differences among them.

Reference no: EM131237175

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