2) Butterfly Spread Graphical (solve it by excel) a) Draw the net profit diagrams for each of the three call positions and the entire butterfly trade using the following attributes Call 1 Strike $50, Premium $1 Call 2 Strike $52, Premium $1 75 Call 3 Strike $54, Premium $3 What does it cost to put on this trade b) Suppose you reverse the positions and write Call 1 and Call 3, and buy two Call 2s Draw the same net profit diagram Why would you take on such a position What does it cost to put on this trade (If you get paid, thats a negative cost)

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Question: 2) Butterfly Spread Graphical (solve it by excel) a) Draw the net profit diagrams for each of the three call positions and the entire butterfly

2) Butterfly Spread Graphical (solve it by excel)

a) Draw the net profit diagrams for each of the three call positions and the entire butterfly trade using the following attributes

Call 1: Strike = $50, Premium = $1
Call 2: Strike = $52, Premium = $1.75
Call 3: Strike = $54, Premium = $3

What does it cost to put on this trade?

b) Suppose you reverse the positions and write Call 1 and Call 3, and buy two Call 2s. Draw the same net profit diagram. Why would you take on such a position?

What does it cost to put on this trade? (If you get paid, thats a negative cost).

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