Consider the following strategy sale of one call with the, Ask an Expert

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Consider the following strategy: sale of one call with the exercise price X1 = $75 for $6, sale of one call with the exercise price X2 = $80 for $4, buy of one call with the exercise price X3 = $70 for $9, and buy of one call with the exercise price X4 = $85 for $2.

a) Graph the profit diagram to this strategy.

b) What is the maximum profit of a trader?

c) What is the maximum loss?

d) What is the name of this strategy?

e) What is a trader betting on when he/she is employing such a strategy?

PLEASE SHOW DETAILED BREAKDOWN EXPLANATION ON THE ANSWERS

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92406492

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