Option Strategy PayoffA trader constructs a long straddle by…
Option Strategy PayoffA trader constructs a long straddle by buying a call and a put on a stock, both with a strike price of $75. The call costs $4.50 and the put costs $3.80.(a) What are the two breakeven stock prices at expiration?(b) Calculate the trader’s profit/loss if the stock price at expiration is $68.(c) Under what market conditions does a long straddle generate a profit?