Question: T = 1/4 year, three call options c1, c2, and c3, K1 = $20, K2 = $30, K3 = 50, c1 = $15, and c2

T = 1/4 year, three call options c1, c2, and c3, K1 = $20, K2 = $30, K3 = 50, c1 = $15, and c2 = $5, c3 = $1.

a. How to create a reverse butterfly spread? Show the possible trading profit/loss mathematically and graphically on the day of maturity.

b. Under what circumstances you expect to use this trading strategy?

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