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Ever since Mr

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Ever since Mr. DRM enrolled in the DRM course, has been observing the Indian stock market which has been on the rising trend without the back-up of appropriate economic fundamentals support. Assume that Mr. DRM’s parents has given him 1000 rupees for trading/investment purpose with a clause that if he loses any money from this 1000 rupees, then he will not get any more money for trading/investment purpose further. Also assume that Mr. DRM wants to pursue his career as a trader. Therefore, Mr. DRM wants to try his DRM course knowledge while keeping in mind the clause set by his parents. The XYZ stock price has fallen from 1500 to 950 rupees in the last one month and its three month call is selling for 150 rupees with a strike price of 1000 rupees. Three month RBI T-bill with a face value of 1000 rupees is selling for 850 rupees. Assume that you are the Mr. DRM and what kind of trading strategy you will follow given information and also assume that after three months the XYZ stock either may go up to 1500 or go down to 750 rupees. Find out the lower and upper boundary gross amount of your strategy. Answer should be: