Butterfly spread using put options
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Three put options on a stock have the same expiration date and strike prices of $55, $60, and $65. The market prices are $3, $5, and $8, respectively. Explain how a butterfly spread can be created. Construct a table showing the profit form the strategy. For what range of stock prices would the butterfly spread lead to a loss?
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The solution demonstrates how a butterfly spread can be created using three put options
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