Question
An advanced option strategy sells a call with strike price 35$, buys a call with strike price 40$, buys a call with strike price 50$,
An advanced option strategy sells a call with strike price 35$, buys a call with strike price 40$, buys a call with strike price 50$, and sells a call with strike price 55$. 1. Draw the payoff graph at expiration. 2. If you implement this strategy do you have to pay or will you receive money? In other words, are the premiums you have to pay more expensive than the premiums you will receive? Why? B. The current price of Apple stock is 40$. You sell one call option with strike price 30$ and one call option with strike price $50, while you buy 2 at the money calls. 1. Draw the payoff graph at expiration. 2. If you implement this strategy do you have to pay or will you receive money? In other words, are the premiums you have to pay more expensive than the premiums you will receive? Why?
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