2. You are planning to trade on the fortunes of a biotechnology firm that has...
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2. You are planning to trade on the fortunes of a biotechnology firm that has a drug patent> pending approval with the Federal Government. If the patent is approved, the stock price is expected to go up sharply. If it is not approved, the stock will drop sharply. In your view it is unlikely that the stock price will move more than 20% in either direction. Describe a portfolio involving a straddle and a strangle that takes advantage of your view. State whether the position is long or short and the trike prices of your positions.
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