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At time t=0 an investor bought (long position) one European call with strike K1=20 and one European call with strike K2=40, she also borrowed (short
At time t=0 an investor bought (long position) one European call with strike K1=20 and one European call with strike K2=40, she also borrowed (short position) two European calls with strike K3=30. All the options are on the same underlying and with the same maturity T. Such a portfolio is called a butterfly spread. Draw the payoff diagram for this butterfly spread
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