Butterfly Spread Graphical a) Draw the net profit diagrams for each of the three call positions and the entire butterfly trade using the following attributes Call 1: Strike = $50, Premium = $1 Call 2: Strike = $52, Premium = $1.75 Call 3: Strike = $54, Premium = $3 What does it cost to put on this trade? b) Suppose you reverse the positions and write Call 1 and Call 3, and buy two Call 2s. Draw the same net profit diagram. Why would you take on such a position?

What does it cost to put on this trade? (If you get paid, thats a negative cost).