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Three call options on a stock currently selling for $50 have the same expiration date and strike prices of $40, $50, and $60. The market
Three call options on a stock currently selling for $50 have the same expiration date and strike prices of $40, $50, and $60. The market prices are $12, $5, and $2 respectively. 1. Explain how a butterfly spread can be created from these three options, 2. Construct a table showing the payoff and profit from this strategy for different values of Sr. 3. Sketch the profit as a function of St. 4. For what values of Sy does the butterfly spread result in a loss
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