Question: Consider: (a) Stock trades for $100; (b) Puts with exercise prices of $90, $100, and $110 trade at prices of $4.36, $7.11, and $13.59 respectively.

Consider:

(a) Stock trades for $100;

(b) Puts with exercise prices of $90, $100, and $110 trade at prices of $4.36, $7.11, and $13.59 respectively.

If a person buys a $90 put and writes a $110 put, what is the magnitude of her maximum loss? The answer is 10.77, how do you solve this?

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