Question: Question 1 2 . 2 4 Three put options on a stock have the same expiration date and strike prices of $ 6 0 ,

Question

12.24

Three put options on a stock have the same expiration date and strike prices of $

60,

65,

and $

70 .

The market prices are $

5,

8,

and $

10,

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?

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