The market received rumour about ABC corporation's tie-up with a multinational company. This has induced the market price to move up. If the rumour…

Cost of Call and Put Options = (Premium per call share × Number of shares per call) + (Premium per put share × Number of shares per put) Assuming 100 shares per option contract for calculation purpose (not explicitly given, but common practice for options problems). Cost = (2per share × 100 shares) + (1per share × 100 shares) = 200 +100 = 300 (i) Investor's position if stock price rises to 43: Market price = 43 Call option: Strike price = 42. Since market price (43) > strike price (42), the call option will be exercised. Gain from call = (Market Price - Strike Price) × Number of shares = (₹ 43 -42) × 100 = 1 × 100 = 100 Put option: Strike price = 40. Since market price (43) > strike price (40), the put option will not be exercised (it will expire worthless). Ending position = (- Cost of options) + Gain from call = -300 +100 = -200 Net Loss = 200 (ii) Investor's ending position if stock price falls to 36: Market price = 36 Call option: Strike price = 42. Since market price (36) < strike price (42), the call option will not be exercised (it will expire worthless). Put option: Strike price = 40. Since market price (36) < strike price (40), the put option will be exercised. Gain from put = (Strike Price - Market Price) × Number of shares = (₹ 40 -36) × 100 = 4 × 100 = 400 Ending position = (- Cost of options) + Gain from put = -300 +400 = 100 Net Gain = 100