Suppose that c1, c2, and c3 are the prices of European call options with strike prices K1,

Question:

Suppose that c1, c2, and c3 are the prices of European call options with strike prices K1, K2, and K3, respectively, where K3 > K2 > K1 and K3 – K2 = K2 – K1. All options have the same maturity. Show that
c2 ≤ 0.5(c1 + c3)
Consider a that is long one option with K1, long one option with K3, and short two options with K2. Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity. Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...