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I finally seem to solve the mystery around troder question part b (i).
Troders goin to invest in the scenario and will buy a floor below the cap to set up a collar hedge. So only options we can select for a call option is 4.25 and 4.5. We cannot select 4.75 as a floor because in that case we won’t be able to set a cap above that amount. And the combinations given are the only possible choices to set up a collar hedge.
I hope my understanding is correct and I will be over the moon as this was my 8th attempt on this question.
Thank you sir.
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