Question: Three different call options on the same stock with the same expiration date have the following strike prices and option prices: Strike Price Call Price

Three different call options on the same stock with the same expiration date have the following strike prices and option prices:

Strike Price

Call Price

$90

$22.70

$100

$16.20

$110

$13.70

A. Construct a payoff table and draw a profit diagram for an option strategy where you buy 1 $90 call, buy 1 $110 call, and write 2 $100 calls. B. Calculate the payoffs and profits assuming the spot price is $98 at expiry. C. What is/are the breakeven price(s), maximum reward, and maximum risk? D. Describe in what circumstances it might make sense to invest in this package?

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