Solve the below problem:
Q1. The current stock price/share is St . Consider the following strategy:
Short sell the stock
1.1 Describe the table of cash flows and P/L one year later when you close out this strategy.
1.2 Graph the P/L of this strategy when it is closed out
Q2. Consider the following strategy:
A Bull Spread:
using one, K1 = 30 put p1 = 4 and one, K2 = 35 put p2 = 7.No graph.
Q3. Using the data given in the example of the State of Texas (see pages 3,4, below) use of protective puts, observe the following strategy:
Long the 62.50 Puts and Short the 65.50 Calls.
3.1 Describe the complete table of cash flows and P/L per barrel at JAN 2019 expiration. Do not forget that the Tax Revenue appears in the table only at January 15, 2019 expiration day.
3.2 Draw the profit profile (P/L) per barrel at expiration.
Attachment:- Crude oil protective puts by the State of Texas.rar