Suppose you take a position in options that guarantees you the following payoffs (excluding price/premia of the options): Payoff = zero if underlying asset is less than or equal to $18 at maturity date Payoff = asset price minus $18 if asset price greater than $18 and less than $20 at maturity date Payoff = $2 if asset price between $20 and $22 at maturity date Payoff = $24 minus asset price for if between $22 and $24 at maturity Payoff = zero if underlying asset ends up greater than $24
a) Plot the payoffs
b) How can you take positions in options in order to achieve these payoffs? (be specific)