1. What is meant by a protective put? What position in call options is equivalent to a protective put?
2. Explain two ways in which a bear spread can be created.
3. When is it appropriate for an investor to purchase a butterfly spread?
4.Call options on a stock are available with strike prices of $15, $171 2 , and $20, and expiration dates in 3 months. Their prices are $4, $2, and $, respectively. Explain how the options can be used to create a butterfly spread. Construct a table showing how profit varies with stock price for the butterfly spread.