Question 5 You are (1) long a call option with an exercise price of 20,...
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Question 5 You are (1) long a call option with an exercise price of 20, (ii) short a call option with an exercise price of 25, (iii) long a put option with an exercise price of 20, and (iv) short a put option with an exercise price of 15 . All options are on the same share of stock with the same exercise date. Plot the value of this combination as a function of the stock price on the exercise date (a payoff diagram). Briefly describe why you would take this position. (10 marks)
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