Create bull spread and bear spread

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Reference no: EM131548982

Suppose that put options on a stock with strike prices $20 and $25 cost $1 and $7, respectively. How can the options be used to create (a) a bull spread and (b) a bear spread? Construct a table that shows the profit and payoff for both spreads. Illustrate using diagrams.

Reference no: EM131548982

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