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Three put options on a stock have the same expiration date and strike prices of $70, $80, and $90 are available at prices of $5,
Three put options on a stock have the same expiration date and strike prices of $70, $80, and $90 are available at prices of $5, $7, and $10, 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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Input your Payoff Table here:
Draw your payoff diagram here:
Please give specific and detailed answers on how to do the payoff table and how to draw the payoff diagram.
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