Question: You purchase a long call ladder spread consisting in one long 90C@12.35, one short 100C@3.15 and one short 110C@1.20. (a) Plot the payoff diagram of

  1. You purchase a long call ladder spread consisting in one long 90C@12.35, one short 100C@3.15 and one

    short 110C@1.20.

    1. (a) Plot the payoff diagram of your spread. Remember to label your axes!

    2. (b) Plot the profit diagram of your spread (assume for simplicity r = 0).

    3. (c) Would the spread be worth buying if the 90 Call was priced at $15.00 while the other prices remained the same?

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