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Payoffs of strategies. Draw the payoffs for these strategies. All derivatives are on the same stock....

Payoffs of strategies. Draw the payoffs for these strategies. All derivatives are on the same stock.
1) Long 1 Stock + Short 1 Call Option


2) Long 1 Stock + Long 1 Put Option


3) Long 1 Call Option with strike 2, Short 1 Call Option with strike 3


4) Short 1 Put Option with strike 2, Long 1 Put Option with strike 3


5) Long 1 Call Option with strike 1, Short 1 Call Option with strike 2, Long 1 Call Option with strike 3

6) Long 1 Call Option with strike 1, Long 1 Put Option with strike 1


7) Long 1 Call Option with strike 1, Long 1 Put Option with strike 2


8) Long 1 Call Option with strike 5, long forward with rate of 5


9) 0.5 Long Call Option (the right to buy 0.5 of a share), 1.5 Long Put Option

10) Short 1 Stock, Short Call Option
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Answer #1

Strate pies Pay off Oiagram for Given 1 Call oftion Short Long 1 6to ck + X market Price f tue shoare Y= Nee Poy-off Fro StraAR&UM Phon we Agume het Strike Price iS. des than Strike Price-3 Premium Stvike Pnce a is On Hence Preiu on strike Prie -3 GrSANike-2 Strire- strike-3 X Market Price f y = Ne py off from strafe Shave OLong Call of tion strike- 1 with with strike - 1Strike all option Long Long - wifa -n StriKe -2 wife a oPhon tuat cll pveium e strike1 A8e Ption we Aumed Put Preiu strike -2Long Call ophon with strike-5 rate f5 Long forword tu 1. XMavkef Prce ofsharC y Net foy-off from Stralegry = Strire -5 allshort stock Call oPhion. Short Strire Piice Price stock x Market fTO Styateg the stock Price farted Nofe once the swike Piceplease refer above posted images for graphs

And hear we take an assumption that

Strike 1 < strike 2 < strike 3

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