Question
Demonstrate how a butterfly spread can be constructed using put or call options and discuss the...
Demonstrate how a butterfly spread can be constructed using put or call options and discuss the potential outcomes from this strategy.
Homework Answers
Answer #1
In butterfly spread position, an investor will undertake 4 call
option with respect to 3 different strike price. Buying 1 call
option at a particular strike price while simultaneously selling 2
call option at higher price and buying 1 other call option at an
even higher strike price.
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