Three-month European put options with strike prices of $50, $55, and $60 cost $2, $4, and $7, respectively. What is the maximum gain when a butterfly spread is created from these put options?
Added by Ryan D.
Step 1
- Cost = $2 (for the $50 put) + $7 (for the $60 put) - 2 x $4 (for selling 2 of the $55 puts) - Cost = $2 + $7 - $8 - Cost = $1 ** Show more…
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