1 explain how an aggressive bear spread can be created, Ask an Expert

Finance

1. Explain how an aggressive bear spread can be created using put options.

2. Suppose that put options on a stock with strike prices $30 and $35 cost $4 and $7, respectively. How can the options be used to create (a) a bull spread and (b) a bear spread? Construct a table that shows the profit and payoff for both spreads.

3. Use put-call parity to show that the cost of a butterfly spread created from European puts is identical to the cost of a butterfly spread created from European calls.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91993053

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