A Trader Creates a Long Butterfly Spread from Options with Strike

question 6

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 loss (after the cost of the options is taken into account) ?

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

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Definitions:

Destructive

Causing great and irreparable harm or damage.

Duchenne Smile

A genuine smile that involves contraction of both the zygomatic major muscle (raising the corners of the mouth) and the orbicularis oculi muscle (raising the cheeks and forming crow's feet around the eyes).

Genuine Smile

A true expression of happiness or pleasure characterized by the movement of the muscles around the eyes and mouth.

Venting Anger

The act of expressing or releasing anger, often in the hope of achieving relief or catharsis, though its effectiveness can vary.