stion 3
10 pts
options on a stock are available with strike prices of $15, $17.5, and $20 and expiration
s in three months. Their prices are $4, $2, and $0.5 respectively. An investor can create a
erfly spread by buying call options with strike prices of $15 and $20 and selling two call
ons with strike prices of $17.50.
What is the initial investment required for this butterfly spread?
What is the profit if the final stock price S(T) = $11.00?
5. What is the profit if S(T) = $16.00?
4. What is the profit if S(T) = $18.00?
5. What is the profit if S(T) = $22.00?
Enter your answer without the dollar sign, with 2 decimals, such as 2.30; enter losses as
negative numbers.)