Multiple Choice
A stock price is currently $23.A reverse (i.e short) butterfly spread is created from options with strike prices of $20,$25,and $30.Which of the following is true?
A) The gain when the stock price is greater than $30 is less than the gain when the stock price is less than $20
B) The gain when the stock price is greater than $30 is greater than the gain when the stock price is less than $20
C) The gain when the stock price is greater than $30 is the same as the gain when the stock price is less than $20
D) It is incorrect to assume that there is always a gain when the stock price is greater than $30 or less than $20
Correct Answer:
Verified
Correct Answer:
Verified
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