Butterfly spread maximum profit
You buy one call struck at $90 for $6.10, sell two calls struck at $100 at $2.10 each, and buy one call struck at $110 for $0.70 (same expiry). What is the maximum profit of this long butterfly, in dollars, net of premium?
Show hints (2)+
- Peak payoff is the strike gap; find it first.
- Then subtract the net premium: 6.10 − 2(2.10) + 0.70.
Answer
Reveal answer →Final answer
7.4
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Interview format: Hedge Fund Quant, Numerical Reasoning Tests