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Suppose a call option at exercise price 100 sells for $8. A call option at exercise price 110 sells at $6, and a call option
Suppose a call option at exercise price 100 sells for $8. A call option at exercise price 110 sells at $6, and a call option at exercise 115 sells for $5. All three options have the same exercise date. Suppose you contemplate a butterfly position (buy the low- and high-exercise price option, sell two calls at the exercise price 110). Show the payoff pattern you have created by means of this butterfly. Explain.
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