Question: A trader creates a long call butterfly spread from options with strike prices K 1 =$60, K 2 = $65 , and K 3 =

  1. A trader creates a long call butterfly spread from options with strike prices K1 =$60, K2 = $65, and K3 = $70 by trading a total of 800 options. The options are worth c1 =$18, c2 = $14, and c3 = $11. What is the maximum net loss (after the cost of the options is taken into account)?
    1. $200
    2. $300
    3. $400
    4. $500
  2. Lucas longed 500 call options on a stock with a strike price of $100 for $10 per option and also longed 500 put options on the same stock at the same strike and maturity for $15 per option. At the maturity if the ST is $120. What is Lucass total gain or loss?
    1. $2500 loss
    2. $3000 loss
    3. $2500 gain
    4. $3000 gain

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