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1) Call options on a stock are available with strike prices of $15, $1712$1712, and...

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Finance

1) Call options on a stock are available with strike prices of $15, $1712$1712, and $20, and expiration dates in 3 months. Their prices are $4, $2, and $12$12, 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.

1A) A call option with a strike price of $50 costs $2. A put option with a strike price of $45 costs $3. Explain how a strangle can be created from these two options. What is the pattern of profits from the strangle?

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