This question requires you to enter three answers and is worth three marks. In the lecture, we constructed a bull spread on WEB as follows: one long call with strike $5 at a premium of $0.65 one short call with strike $7 at a premium of $0.16 what is the breakeven point for this bull spread? That is, at what share price does the bull spread have a zero net profit? Blank 1 Question 8[select: , any share price between $5 and $7, 5.49, 7.49, 6.51, 4.51] There is another way to construct a bull spread. Instead of using call options, we can use put options. The following WEB put options are available: a put option with a strike of $5 at a premium of $0.71 a put option with a strike of $7 at a premium of $2.20 Which of the following option trading strategies generates a payoff diagram with a similar shape to the bull spread?You can use your intuition to answer this question. Blank 2 Question 8[select: , long the put with strike of $5 and long the put with the $7 strike, short the put with the $5 strike and short the put with the $7 strike, short the put with $5 strike and long the put with the $7 strike, long the put with the $5 strike and short the put with the $7] What is the breakeven point for this bull spread when it is constructed using puts? Blank 3 Question 8[select: , 5.51, 5.49, 6.51, any share price between $5 asnd $7]多重下拉选择题

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Question text 5Marks A trader is deliberating between two option-trading strategies, both of which are designed to speculate on the volatility in the underlying asset: a short straddle can be constructed by entering a short call and a short put, each with a $40 strike price. a short strangle can be constructed by entering a short call with a $45 strike and a short put with a $35 strike. Answer each of the following questions, giving your answer to 2 decimal places.If the calculated number is negative, be sure to enter the negative sign in the box. Do not enter the dollar sign ($).Required:The short straddle and the short strangle will both make a profit if the underlying share price Answer 1[select: , remains close to, moves far away from] its current position.For the short straddle, the lower breakeven point is Answer 2[input] and the upper breakeven point is Answer 3[input].For the short strangle, the lower breakeven point is Answer 4[input] and the upper breakeven point is Answer 5[input]. (For each box above, enter your answer to 2 decimal places. If the calculated number is negative, be sure to enter the negative sign in the box. Do not enter the dollar sign ($).)Please answer all parts of the question.Notes Report question issue Question 27 Notes

Question text 5Marks A trader is deliberating between two option-trading strategies, both of which are designed to speculate on the volatility in the underlying asset: a short straddle can be constructed by entering a short call and a short put, each with a $40 strike price. a short strangle can be constructed by entering a short call with a $45 strike and a short put with a $35 strike. Answer each of the following questions, giving your answer to 2 decimal places.If the calculated number is negative, be sure to enter the negative sign in the box. Do not enter the dollar sign ($).Required:The short straddle and the short strangle will both make a profit if the underlying share price Answer 1[select: , remains close to, moves far away from] its current position.For the short straddle, the lower breakeven point is Answer 2[input] and the upper breakeven point is Answer 3[input].For the short strangle, the lower breakeven point is Answer 4[input] and the upper breakeven point is Answer 5[input]. (For each box above, enter your answer to 2 decimal places. If the calculated number is negative, be sure to enter the negative sign in the box. Do not enter the dollar sign ($).)Notes Report question issue Question 27 Notes

Red Bull GmbH sells over 6 billion cans of its energy drink each year. Each can of energy drink is made from aluminium. You have a friend (who has a friend who knows someone who works at Red Bull's head office in Austria) who mentioned a rumour that Red Bull will soon announce that it is moving away from aluminium can packaging and exclusively adopting plastic bottles.If this transpires, global demand for aluminium will fall significantly. This leads you to believe that the price of aluminium may fall in the coming months. You visit the webpage for the Chicago Mercantile Exchange and discover that they trade option contracts written on alumina.The current (spot) price of alumina is $400 per metric ton. Alumina option contracts with expiry in Dec-2026 are quoted with a strike price of $410 per metric ton. Each alumina option contract covers the delivery of 100 metric tons of alumina. You will trade five (5) long option contracts. There are two boxes below, each requiring an answer. Do not write your answer in the yellow "notes" box (the grader does not see this).[Fill in the blank] Required: With an eye towards profiting from a falling alumina price, will you enter long call or put option contracts on alumina?Clearly explain the rationale for your answer.[Fill in the blank] Several weeks after entering five Dec-2026 alumina option contracts, Red Bull announced their move to plastic bottles and the price of alumina decreased. Towards the end of December 2026, alumina is trading at $350 per metric ton in the spot market. You decide to exercise your options and realise your profit/loss.Required:Describe what transactions occur when you exercise your options and calculate the total profit or loss from your trading.[Fill in the blank]

Consider a put option and a call option written on the same stock and with the same strike price. Which of the following is true?

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