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Homework answers / question archive / Three put options on a stock have the same expiration date and strike prices of $55, $60, and $64
Three put options on a stock have the same expiration date and strike prices of $55, $60, and $64. The market prices are $3.50, $5, and $8.50, respectively. Explain how a butterfly spread can be created. Construct a table with price ranges of the underlying in column 1 and the profit from the strategy in column 2. For what range of stock prices would the butterfly spread lead to a loss?