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Suppose you want to create a Butterfly option strategy based on NFLX call options. The Butterfly strategy will involve the following: Buying a call
Suppose you want to create a "Butterfly" option strategy based on NFLX call options. The Butterfly strategy will involve the following: Buying a call option with strike price $320 Selling TWO call options with strike price $360 Buying a call option with strike price $400 You want all of these options to have the same expiration date of July 21, 2023. a) Go to Yahoo! Finance and search for Netflix (symbol: NFLX), then click on the "Options" tab, then select "July 21, 2023" from the dropdown box below the stock price to obtain a list of NFLX options with approximately six months to expiration. The "Ask" price is the price at which you can buy an option while the "Bid" price is the price at which you can sell an option. Report the bid and ask prices for the three call options described above. Also report the date, time, and prevailing stock price when you retrieved these options prices. You should collect these data during regular trading hours (8:30am to 3:00pm CST on weekdays), as bid and ask prices are not always available during off-market hours. b) Provide the payoff function for each range of strike prices in which the stock price could land at expiration. There are four ranges in which the stock price could land at expiration: ST < 320 320
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