Question
6) A stock price is currently $23. A reverse (i.e., short) butterfly spread is created from options with strike prices of $20, $25, and $30.
6) A stock price is currently $23. A reverse (i.e., short) butterfly spread is created from options with strike prices of $20, $25, and $30. Which of the following is true?
A) The gain when the stock price is greater that $30 is less than the gain when the stock price is less than $20
B) The gain when the stock price is greater that $30 is greater than the gain when the stock price is less than $20
C) The gain when the stock price is greater that $30 is the same as the gain when the stock price is less than $20
D) It is incorrect to assume that there is always a gain when the stock price is greater than $30 or less than $20
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