Assume you buy a strangle with exercise prices on the constituent options of 75 and $80. You

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Assume you buy a strangle with exercise prices on the constituent options of 75 and $80. You also sell a strangle with exercise prices $70 and $85.

Describe the payoffs on the combined long and short strangle.

Explain whether the combined position of the long and short strangle has a payoff pattern that is like that of any other strategies explored in this course.

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Fundamentals of Investment Management

ISBN: 978-0078034626

10th edition

Authors: Geoffrey Hirt, Stanley Block

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Posted Date: Mar 21, 2023 02:44 AM

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Assume you buy a strangle with exercise prices on the constituent options of 75 and $80. You

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Expert Answer:

A strangle is an options strategy where a trader buys or sells both a put and a call option with different strike prices but with the same expiration date The strategy involves taking a position in bo... View the full answer

Fundamentals of Investment Management

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