Question: In each case provide a table showing the relationship between stock price, payoff, and profit. A bull spread using European call options with strike prices
In each case provide a table showing the relationship between stock price, payoff, and profit.
- A bull spread using European call options with strike prices of $25 and $30 and a maturity of six months. A call option with a strike price of 25 costs 7.90 and a call option with a strike price of 30 costs 4.18.
- A bear spread using European put options with strike prices of $25 and $30 and a maturity of six months. A put option with a strike price of 25 costs 0.28 and a put option with a strike price of 30 costs 1.44.
- A butterfly spread using European call options with strike prices of $25, $30, and $35 and a maturity of one year. Call options with maturities of one year and strike prices of 25, 30, and 35 cost 8.92, 5.60, and 3.28, respectively.
- A butterfly spread using European put options with strike prices of $25, $30, and $35 and a maturity of one year. Put options with maturities of one year and strike prices of 25, 30, and 35 cost 0.70, 2.14, 4.57, respectively.
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