B. What prices will result in the option being exercised? 3. Call options are available with...
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B. What prices will result in the option being exercised? 3. Call options are available with strike prices of $5, $17 and $20 at prices of $4, $2, and $0.5. Consider a butterfly spread. A. What are the breakeven stock prices for this trade? B. What are the stock prices that make this a profitable trade? Not this thouigh 10.4 Call options on a stock are available with strike prices of $15, $17, and $20, and expiration dates in 3 months. Their prices are $4, $2, and $2, respectively. Explain how the options can be used to create a butterfly spread. Construct a table showing how profit varies with stock price for the butterfly spread. A butterfly spread can be created by buying call options with strike prices of $15 and $20 and shorting two call options with strike prices of $17. This requires an initial investment of $4 + $ 2 $2 = $. The table below shows the variation of the profit with the stock price at expiry. Stock price, ST ST < 15 15 < ST < 17 17 20 B. What prices will result in the option being exercised? 3. Call options are available with strike prices of $5, $17 and $20 at prices of $4, $2, and $0.5. Consider a butterfly spread. A. What are the breakeven stock prices for this trade? B. What are the stock prices that make this a profitable trade? Not this thouigh 10.4 Call options on a stock are available with strike prices of $15, $17, and $20, and expiration dates in 3 months. Their prices are $4, $2, and $2, respectively. Explain how the options can be used to create a butterfly spread. Construct a table showing how profit varies with stock price for the butterfly spread. A butterfly spread can be created by buying call options with strike prices of $15 and $20 and shorting two call options with strike prices of $17. This requires an initial investment of $4 + $ 2 $2 = $. The table below shows the variation of the profit with the stock price at expiry. Stock price, ST ST < 15 15 < ST < 17 17 20
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