(Butterfly spread) In the butterfly spread below the investor buys one call option with X = $50, writes two call options with X = $60, and buys one call option with X = $70. Graph the strategy profits. Why might this be an attractive strategy?

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1 Call prices 2 X 3 50 4 60 5 70 6 7 A B Price Strategy 22.00 buy 1 15.00 write 2 10.00 buy 1 8 9 Payoff and profits Stock price at option expiration, ST 30.00 10 35.00 11 40.00 12 45.00 13 50.00 14 52.50 15 55.00 16 57.50 17 60.00 18 62.50 19 65.00 20 67.50 21 70.00 22 72.50 23 75.00 24 80.00 25 85.00 26 90.00 D E Payoff on X = $50 call Payoff on -2X = $60 call Payoff on Total X = $70 call profit