Initial cash flow of the butterfly spread strategy

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1.Suppose that put options on a stock with strike prices $45 and $55 cost $3 and $8, respectively. Use these options to create a bear spread. At what stock price at maturity will you break even? In other words, at what stock price, will you make $0 profit?

2. Suppose you are creating a butterfly spread using call options with 3 different strike prices. Currently, the call price with strike price of $40 is $20.93, the call with strike price of $50 is $12.74, and the call with strike price of $60 is $5.48.

What is the initial cash flow of the butterfly spread strategy? If it's a cash inflow, enter a positive number.  If it's a cash outflow, enter a negative number.

Reference no: EM131473594

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