A Trader Creates a Long Butterfly Spread from Options with Strike

question 19

Multiple Choice

A trader creates a long butterfly spread from options with strike prices $60,$65,and $70 by trading a total of 400 options.The options are worth $11,$14,and $18.What is the maximum net gain (after the cost of the options is taken into account) ?

• A) $100
• B) $200
• C) $300
• D) $400

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Definitions:

Exceeded

To go beyond an established limit or standard.

More Than One Vendor

Utilizing services or products from multiple suppliers or companies instead of relying on a single source.

Estimate Cost

The process of forecasting the financial expenditure required to complete a project or produce a good.

Selection Phase

The stage in a project or procurement process where options are evaluated and choices are made regarding resources, suppliers, or methods.