An investor purchases a call option with a strike price of, Ask an Expert

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An investor purchases a call option with a strike price of $40 and a premium of $3. At the same time, she sells a call option with a strike price of $45 and a premium of $1.25 on the same stock and with the same expiration date. What type of position has this investor created? Draw the payoff picture for this strategy. Compare this strategy to simply purchasing the $40 call option. Now suppose the investor also purchases a call option with a strike price of $50 and a premium of $0.50. What type of strategy is this? Draw the payoff picture for this strategy.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92163517

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