Graph the payoff diagram for the following asymmetric butterfly: buy one call with strike price=35, buy four
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Question:
Graph the payoff diagram for the following "asymmetric butterfly": buy one call with strike price=35, buy four calls with strike price=45, and sell 5 calls with strike price=43.
Hint: make 3 lines (payoffs) in one graph, add in another graph right under that. Note that if you buy 2 calls, the slope is two in the sloped part of the graph. That is, if the price increases by one, you make one extra dollar, per call.
Be careful when adding the slopes.
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