1. Suppose you are a gas user, such as a chemical company, and want to...
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1. Suppose you are a gas user, such as a chemical company, and want to put a ceiling on the price you will have to pay for gas in 3 months by longing a call with K=$5.00. To offset (approximately) the cost of the call, you short a put with K=$4.20. Calculate and graph the net price you will pay for your gas 3 months later when gas prices are $3.80, $4.00, $4.20, ....$5.20 including the future value of the option premiums.
2. Does put-call parity hold for these natural gas forward and options prices? Why?
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