1. A two-month European put option on a stock is currently selling for $2.50. The stock price is $47, the strike price is $50, and a dividend of $1.00 is expected in one month, the risk-free interestrate is 6% per annum. What opportunities are there for an arbitrageur?
2. Graph the terminal profits of this portfolio: an investor purchases one put option with strike price of 100 for $5 and a call option with strike price of 120 for $3 (this is called a strangle). Graph the profits of each option first, then add the profits of the entire portfolio.