The following information is currently available for Canadian dollar (C$) options (see Appendix B in this chapter):
¦ Put option exercise price = $.75.
¦ Put option premium = $.014 per unit.
¦ Call option exercise price = $.76.
¦ Call option premium = $.01 per unit.
¦ One option contract represents C$50,000.
a. What is the maximum possible gain the purchaser of a strangle can achieve using these options?
b. What is the maximum possible loss the writer of a strangle can incur?
c. Locate the break-even point(s) of the strangle.
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