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Call options on a stock are available with strike prices of $15, $17.5, and $20 and expiration dates in 3-months. Their prices are $4, $2,
Call options on a stock are available with strike prices of $15, $17.5, and $20 and expiration dates in 3-months. Their prices are $4, $2, and $0.5, respectively. An investor creates a portfolio by buying call options with strike prices of $15 and $20 and selling 2 call options with strike prices of $17.5.
a. Construct a table showing how profit varies with the stock price for this portfolio.
b. Plot the payoff diagram?
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