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Portfolio 1 break-even. Draw the gross and net payoff diagrams for a portfolio which is constructed from buying one call option with a strike price
- Portfolio 1 break-even. Draw the gross and net payoff diagrams for a portfolio which is constructed from buying one call option with a strike price of 45 and selling one call option with a strike price of 50. The cost of the first option is 7.75 and the cost of the second option is 3.50. Using your diagram, at what stock price will you break-even (have a zero profit on your investment)? Assume the options are European and they each have a maturity of a year.
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