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  3. 4. a butterfly spread is the purchase of one call

4. A butterfly spread is the purchase of one call at strike price X1, the...

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Finance

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4. A butterfly spread is the purchase of one call at strike price X1, the sale of two calls at strike price X2, and the purchase of one call at exercise price X3, with X3 > X2 > X1, each by equal amounts. All options have the same expiration date. Graph the payoff diagram to this strategy, and give a suggestion of when you might want to engage in it

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