You observe the following call options for different strike prices: 50 59 65 Strike Price Call Premium 14 8.9 5 Your friend Kyle claims these options are mispriced, and that you can arbitrage this mispricing with the following asymmetrical butterfly spread portfolio: long four 50-strike calls short ten 59-strike calls long six 65-strike calls What is the minimum profit of this portfolio? Does it constitute arbitrage? There is not enough information to say what minimum profit will be. Likewise, there is not enough information to say whether or not there is opportunity for arbitrage. There is no minimum profit. The shorted calls expose us to unbounded negative profit (losses) for increasing S. This is not arbitrage, since we are exposed to possible losses. Minimum profit: $0. Yes this is arbitrage, since it required no initial investment, and was subject to no risk of loss. Minimum profit: $3 plus interest. Yes this is arbitrage, since it required no initial investment, and was subject to no risk of loss. Minimum profit:-$6.59. This is not arbitrage, since we are exposed to possible losses. You observe the following call options for different strike prices: 50 59 65 Strike Price Call Premium 14 8.9 5 Your friend Kyle claims these options are mispriced, and that you can arbitrage this mispricing with the following asymmetrical butterfly spread portfolio: long four 50-strike calls short ten 59-strike calls long six 65-strike calls What is the minimum profit of this portfolio? Does it constitute arbitrage? There is not enough information to say what minimum profit will be. Likewise, there is not enough information to say whether or not there is opportunity for arbitrage. There is no minimum profit. The shorted calls expose us to unbounded negative profit (losses) for increasing S. This is not arbitrage, since we are exposed to possible losses. Minimum profit: $0. Yes this is arbitrage, since it required no initial investment, and was subject to no risk of loss. Minimum profit: $3 plus interest. Yes this is arbitrage, since it required no initial investment, and was subject to no risk of loss. Minimum profit:-$6.59. This is not arbitrage, since we are exposed to possible losses