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An investor purchases a call option with a strike price of $40 and a premium of $3. At the same time, she sells a call
An investor purchases a call option with a strike price of $40 and a premium of $3. At the same time, she sells a call option with a strike price of $45 and a premium of $1.25 on the same stock and with the same expiration date. What type of position has this investor created? Draw the payoff picture for this strategy. Compare this strategy to simply purchasing the $40 call option.
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