Question: Problem 11.20. Three put options on a stock have the same expiration date and strike prices of $55, $60, and $65. The market prices are

Problem 11.20.

Three put options on a stock have the same expiration date and strike prices of $55, $60, and $65. The market prices are $3, $5, and $8, respectively. Explain how a butterfly spread can be created. Construct a table showing the profit from the strategy. For what range of stock prices would the butterfly spread lead to a loss? A butterfly spread is created by buying the $55 put, buying the $65 put and selling two of the $60 puts

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