Question: trader creates a bear spread by selling a six-month put option with a 20 strike price for 3 and buying a six-month put option with

  1. trader creates a bear spread by selling a six-month put option with a 20 strike price for 3

    and buying a six-month put option with a 25 strike price for 4.5.

    1. What is the initial investment?

    2. What is the total payoff when the stock price in six months is (a) 18, (b) 23 , and (c) 30

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