Using the following prices for 6-month European calls, explain how an investor could create a butterfly spread and what are the potential gains/losses?

Strike Price ($)	Call Price ($)
40	12
45	10
50	8

Answer rating: 100% (QA)

To create a butterfly spread the investor would simultaneously buy one call option with a strike price of 45 and sell two call options one with a stri... View the full answer