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need Finance expert Using a different set of assumptions for the future of the Netflix company, Leopold has come to conclusion that Netflix is correctly
need Finance expert
Using a different set of assumptions for the future of the Netflix company, Leopold has come to conclusion that Netflix is correctly priced. Leopold also forecasts very low volatility for Netflix over the near term. In order to potentially capitalize off of his assumptions, Leopold has decided to execute a strategy called a "3-to-1 ratio spread with calls", which involves buying 1 low-strike call and writing 3 at-the-money calls. The most liquid calls available on Netflix are the following: a. Graph the expiration-day profit diagram for this strategy in Excel with stock prices ranging from $250 to 325 ? (30 points) b. What expiration-day stock price range would produce positive profits for this ratio spread strategy? ( 20 points) Bonus Question: Given the real-world distributional characteristics of stock prices, why might someone potentially prefer the above ratio-spread over a butterfly spread? (Bonus Max: 10 points)
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