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A trade contains these three pieces: buy two put options at strike price A, write three put options at strike price B, and buy one
A trade contains these three pieces: buy two put options at strike price A, write three put options at strike price B, and buy one put option at strike price C . The options are European options that have the same expiry date and are on the same underlying asset. A < B < C. Create a payoff cash flow table for this trade and create a chart of the payoffs. Explain the rationale of this trade, and what strengths and weaknesses it has. Also determine if your answer depends on the current price of the underlying asset.
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