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Suppose that two call options on a stock with strike prices $80 and $85 cost $7 and $4, respectively. They have the same expiration date.
Suppose that two call options on a stock with strike prices $80 and $85 cost $7 and $4, respectively. They have the same expiration date. A bull spread involves buying a call on a stock with a lower strike price and selling a call on the same stock with a higher strike price. Complete the table below that shows the payoff for a bull spread Total payoffs Buy a call (K1=$80) Sell a call (K2=$85) Price range St85
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