Question: 1. (i) Demonstrate how a butterfly spread would be created using options and explain the circumstances under which a trader might construct the spread. (ii)

1. (i) Demonstrate how a butterfly spread would be created using

1. (i) Demonstrate how a butterfly spread would be created using options and explain the circumstances under which a trader might construct the spread. (ii) Use a numerical example to compare the potential payoffs and profits from a straddle and a strangle combination. 1. (i) Demonstrate how a butterfly spread would be created using options and explain the circumstances under which a trader might construct the spread. (ii) Use a numerical example to compare the potential payoffs and profits from a straddle and a strangle combination.

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