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In this problem, you will use strike price as K and stock price at maturity of option as ST. For each cases, graph the payoff (not net profit) at T depending on ST. That is, have the payoff as y-axis value and ST as the x-axis value. Refer to the Lecture Note where Protective Put was discussed and it should be clear what you are supposed to do.)
(a) Covered Call : Long in stock + short in call option
(b) Straddle Combination : Buying a call and a put with the same strike price and maturity 2
(c) Bull Spread : Buying a call with K1, and sell a call with K2, where K1 < K2 Problem.
(d) Collar : Long in stock + long in put with K1 + short in call with K2, where K1 < K2
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