A call butterfly spread is a portfolio of call options that have the same expiry date: buy 1 option with exercise price X1, sell two options with exercise price X2 and buy one option with exercise price X3.

(a) Write a function in Excel that calculates the payoff from a call butterfly spread when the options expire. The function should have four parameters, the underlying asset price S at expiry, X1, X2 and X3. Hint: use conditional calculations in Excel.

(b) Test the function when X1 = 4000, X2 = 5000 and X3 = 6000, and plot the payoff against the asset price on the expiry date. Again, submit the print outs of the work you have done in the computer, especially the graph showing the butterfly payoff curve.