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Given the three different options below, create a long volatility strategy using a butterfly. In other words, you are expecting the volatility of the stock
Given the three different options below, create a long volatility strategy using a butterfly. In other words, you are expecting the volatility of the stock to increase over the life of these options. The stock is currently trading for $55.00 0/2/18 1/15/19 Call Strike = X Premium 40.00 $ 55.00$ 70.00 $ 22.00 0.00 6.50 Expiration T #N/A Risk Free Rate = r .50% Fill in the Table Below showing the profit/loss of the strategy given the stock price at maturity Quantity 0.00 20.00 30.00 40.00 50.00 55.00 60.00 70.00 80.00 90.00 00.00 Graph the Profit and Loss of this sfrategy
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