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Suppose today is December 15, 2010. You decide to buy a 2:1 January Ratio Call Spread on Google stock. Specifically , you buy one call

Suppose today is December 15, 2010. You decide to buy a 2:1 January Ratio Call Spread on Google stock. Specifically ,

you buy one call on Google with strike $570 and premium $35.55, and

you write two calls on Google with strike $600 and premium $19. All options are European and mature on January 15, 2011.

(a) What is the net premium that you collect/pay in December?

(b) What are the cash flows of this strategy in January?

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