The following is an options strategy:

Buy $1$ call at the strike that is below the current stock price $($Strike Price $"A")$

Sell $2$ calls at the strike price nearest the current stock price $($Strike Price $"$B$")$

Buy $1$ call at the strike price that is above the current stock price $($Strike Price $"$C$")$

All options have the same expiration date$**$

An example, assuming a stock has a market price of $$50\mathrm{.}00.$ The investor would:

Buy $1$ call option at a strike price of $$45\mathrm{.}00$

Sell $2$ call options at a strike price of $$50\mathrm{.}00$

Buy $1$ call option at a strike price of $$55\mathrm{.}00$

Chose a stock and construct this option strategy. Use yahoo finance to gather the prices for the options. Use the "Last Price" as the option premium. You expiration date should be the last expiration date in July of this year.

Create a payoff table for this options strategy. Put each short call in it's own row in the table and treat this like $4$ options.

Answer the following questions

What is the cost to enter into the position?

What it the maximum possible loss?

What it the maximum gain on the position?

For the above questions, remember that each option contract represents $100$ shares.

Graph the diagram for this position.

What is the price$($s$)$ at which you break even? $(($The break$-$even is where your profit $=$ $$0)$

Why would you invest in this position $($What are you hoping the stock will do$)?$