The butterfly spread for four possible price ranges

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Reference no: EM132038420

Call options on a stock are available with strike prices of $25, $27.5 and $30 and expiration dates in three months. Their prices are $5, $3 and $1.5 respectively. Explain how the options can be used to create a butterfly spread. Construct a table showing how profit varies with stock price for the butterfly spread for four possible price ranges.

Reference no: EM132038420

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