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Suppose you create a long bull spread by buying and selling calls with strikes X1 and X2 respectively. Draw the payoff diagram, i.e. only cash
Suppose you create a long bull spread by buying and selling calls with strikes X1 and X2 respectively. Draw the payoff diagram, i.e. only cash flows at expiration, and explain why the strategy would generate a cash inflow or outflow. How would this differ if you used puts instead to achieve a similar transaction?
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