Question: A reverse straddle spread involves selling an equal number of calls and puts that are written on the same stock and have the same strike

A reverse straddle spread involves selling an equal number of calls and puts that are written on the same stock and have the same strike price X and time to expiration.

Let Nc = 1, N, = 1. (4 Marks).

a. What are the profit ranges at expiration?

b. What is the maximum profit?

c. What is (are) the breakeven stock price(s)?

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