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The following option prices were observed for calls and puts on a stock on July...

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The following option prices were observed for calls and puts on a stock on July 6 of a particular year. The stock was priced at 165.13 . The expirations are July 17, August 21, and October 16 . The continuously compounded risk-free rates associated with the three expirations are 0.0503,0.0535, and 0.0571 , respectively. The standard deviation is 0.21 Part A Construct a bear money spread using the October 165 and 170 calls. Hold the position until the options expire. Determine the profits and Identify the breakeven stock price at expiration and the maximum and minimum profits. Part B Suppose you are expecting the stock price to move substantially over the next three months. You are considering a butterfly spread. Construct an appropriate butterfly spread using the October 160 , 165 , and 170 calls. Hold the position until expiration. Determine the profits and graph the results. Identify the two breakeven stock prices and the maximum and minimum profits

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