Chapter 06 · Section 6.1

Premiums-2

PUTS

100 .60/share
110 3.70/share
120 10.80/share

Suppose that you wanted to construct a short butterfly spread using these options. How much net premium do you receive for this position on a per share basis?

a) 3
b) -1
c) 7.70
• d) 400
  No. The question asks for the premium on a per share basis. Divide your answer by 100 and try again.
  e) +4

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