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You plan on trading options for a stock using a straddle strategy. The stock offers a...

You plan on trading options for a stock using a straddle strategy. The stock offers a call with a strike price of $75 with a premium of $4. It also offers a put with a strike price of $75 with a premium of $7. Both options expire on the same day.

  1. For what range of stock prices would the straddle lead to loss?
  2. For what range of stock prices would the straddle lead to gain?
  3. Draw the profit and price diagram that shows the breakeven points as well as gain and loss areas.
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