The common stock of the Avalon Corporation has been trading in a narrow range around $40 per share for months, and you believe it is going to stay in that range for the next 3 months. The price of a 3-month put option with an exercise price of $40 is $3.40, and a call with the same expiration date and exercise price sells for $4.30. Suppose you write a strap (that is, you sell two calls and sell one put) and the stock price winds up to be $42 at contract expiration. What was your net profit on the strap?
A. $500
B. $700
C. $800
D. $600