3.18 Verify that the butterfly spread in Figure 3.14 (see below) can be duplicated by the following transactions (use the option prices in Table 3.4, see below): a. Buy 35 call, sell two 40 calls, buy 45 call. b. Buy 35 put, sell two 40 puts, buy 45 put. c. Buy stock, buy 35 put, sell two 40 calls, buy 45 call. Profit ($) +Written straddle + Butterfly FIGURE 3.14 Comparison of the 35- 40-45 butterfly spread, obtained by adding the profit diagrams in Figure 3.13, with the written 40-strike straddle. 15 10 10 5 0 -5 -10 -15- -20 20 25 30 35 40 45 50 55 55 XYZ Stock Price ($) 60