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An investor writes a put option with exercise (strike) price of $80 and buys a put...

  1. An investor writes a put option with exercise (strike) price of $80 and buys a put with exercise price of $65. The puts sell for $8 and $3 respectively. If the options are on the same stock with the same expiration date,

i. Draw the payoff and profit/loss diagrams for the above strategy at expiration date of options

ii. Calculate the breakeven point for this strategy and discuss whether the investor is bullish or bearish on the underlying stock.

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