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Three call options on a stock have the same expiration date and strike prices of $70, $65, and $60. The market prices are $5, $6,
Three call options on a stock have the same expiration date and strike prices of $70, $65, and $60. The market prices are $5, $6, and $9, respectively. Explain how a butterfly spread can be created.
Construct a table showing the profit from the strategy.
For what range of stock prices would the butterfly spread lead to a loss?
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