Question: Write out the tabular payoff matrix for a Bear spread using puts if you have the following information: An investor buys for $3 a 3-month

Write out the tabular payoff matrix for a Bear spread using puts if you have the following information:

  • An investor buys for $3 a 3-month European put with a strike price of $380 and sells for $1 a 3-month European put with a strike price of $360.
  • The payoff from this bear spread strategy is zero if the stock price is above $380, and $5 if it is below $360.
  • If the stock price is between $360 and $380, the payoff is 380 - ST. The options cost $30.50 - $19.40 = $11.10 up front.

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