Consider two calls, one with an exercise price of $40 and one with an exercise price of

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Consider two calls, one with an exercise price of $40 and one with an exercise price of $45. Assume that the call with the $40 exercise price sells for $8 and the call with the $45 exercise price sells for $5. Assume that they have the same expiration date.
Consider the strategy of issuing two $45 calls and purchasing one $40 call. Plot the profit versus the share price at the expiration date.
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Modern Portfolio Theory and Investment Analysis

ISBN: 978-1118469941

9th edition

Authors: Edwin Elton, Martin Gruber, Stephen Brown, William Goetzmann

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