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3 . Assume that there are 3 call options on ABC Bank shares with exercise prices of Rs . 1 2 0 0 , Rs

3. Assume that there are 3 call options on ABC Bank shares with exercise prices of Rs.1200, Rs.1250 and Rs.1300 with the same expiry date. Spot price of the shares is Rs.1225. Assume that the call prices are Rs.80, Rs.50 and Rs.30 for the respective strike prices. Construct a bullish call spread using these call options. Show the payoff profile for this strategy assuming that on expiry day, the share price falls within the range of 1000 to 1500 at intervals of Rs.50, i.e.1000,1050,1100,1150...1450,1500. Also show the payoff diagram.

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