Question: A trader creates a straddle by buying a call with a strike of $45 for $3.3 and a put with the same strike for $4.7.

A trader creates a straddle by buying a call with a strike of $45 for $3.3 and a put with the same strike for $4.7.

What is the maximum profit?

What is the maximum loss?

What will be the payoff and profit if the spot price at expiration is $30; $42; $67?

8.7.1

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