FINC300: Analysis of Derivative Securities 1.COVID-19 and Stock MarketVolatility a. WHY might Investor Sam be more incli

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FINC300: Analysis of Derivative Securities
1.COVID-19 and Stock MarketVolatility
a. WHY might Investor Sam be more inclined to create a bear
spread (as opposed to a bull spread)? Next, assume Sam’s creates a
bear spread using two put options, X1and X2. Sketch a graph of this
position. (You may use a single or 3 separate graphs. Please be
sure to use dotted lines or a colour pencil to illustrate the
synthetic position.)
b. Create a bear spread using two call options. (You may use 3
separate graphs. If, however, you use a single graph, be sure to
use dotted lines or a colour pencil to illustrate the synthetic
position.)