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Please explain your process, and how you derived the equation you used. I know the answer is 1(13+7) + 2(-9) + (51-46) but I do
Please explain your process, and how you derived the equation you used.
I know the answer is 1(13+7) + 2(-9) + (51-46) but I do not know why. I can rationalize that 1(13+7) + 2(-9) comes from the intrinsic payoff value of the options but I do not know why we subtract the difference in strike price of only two of the options afterwards
Suppose that you sell for $13 a call option with a strike price of $46, sell for $7 a call option with a strike price of $56, and buy for $9 each two call options with a strike price of $51. What is your minimum possible profit? Answer =$
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